Business Wire | Feb 25, 2021 04:27PM EST

Ladder Capital Corp Reports Results for the Quarter and Year Ended December 31, 2020

Feb. 25, 2021

NEW YORK--(BUSINESS WIRE)--Feb. 25, 2021--Ladder Capital Corp (NYSE: LADR) ("we," "Ladder," or the "Company") today announced operating results for the quarter ended December 31, 2020. GAAP loss before taxes for the three months ended December 31, 2020 was $16.3 million, and diluted earnings per share was a loss of $0.10. Distributable earnings was $4.9 million, or $0.05 of distributable EPS. GAAP loss before taxes for the twelve months ended December 31, 2020 was $19.2 million, and diluted earnings per share was a loss of $0.13. Distributable earnings was $68.3 million, or $0.60 of distributable EPS.

"We're pleased to have raised substantial liquidity and delevered the company in 2020," said Brian Harris, Ladder's Chief Executive Officer. "We've now started to write new loans and make new investments to deploy that liquidity from a position of strength in 2021."

Supplemental

The Company issued a supplemental presentation detailing its fourth quarter and full year 2020 operating results, and certain 2021 interim financial information, which can be viewed at http://ir.laddercapital.com.

Conference Call and Webcast

We will host a conference call on Thursday, February 25, 2021 at 5:00 p.m. Eastern Time to discuss fourth quarter 2020 results. The conference call can be accessed by dialing (877) 407-4018 domestic or (201) 689-8471 international. Individuals who dial in will be asked to identify themselves and their affiliations. For those unable to participate, an audio replay will be available from 8:00 p.m. Eastern Time on Thursday, February 25, 2021 through midnight Thursday, March 11, 2021. To access the replay, please call (844) 512-2921 domestic or (412) 317-6671 international, access code 13714818. The conference call will also be webcast though a link on Ladder Capital Corp's Investor Relations website at ir.laddercapital.com/event. A web-based archive of the conference call will also be available at the above website.

About Ladder

Ladder Capital Corp is an internally-managed commercial real estate investment trust with $5.9 billion of assets as of December 31, 2020. Our investment objective is to preserve and protect shareholder capital while producing attractive risk-adjusted returns. As one of the nation's leading commercial real estate capital providers, we specialize in underwriting commercial real estate and offering flexible capital solutions within a sophisticated platform.

Ladder originates and invests in a diverse portfolio of commercial real estate and real estate-related assets, focusing on senior secured assets. Our investment activities include: (i) our primary business of originating senior first mortgage fixed and floating rate loans collateralized by commercial real estate with flexible loan structures; (ii) investing in investment grade securities secured by first mortgage loans on commercial real estate; and (iii) owning and operating commercial real estate, including net leased commercial properties.

Founded in 2008, and led by Brian Harris, the Company's Chief Executive Officer, Ladder is run by a highly experienced management team with extensive expertise in all aspects of the commercial real estate industry, including origination, credit, underwriting, structuring, capital markets and asset management. Members of Ladder's management and board of directors are highly aligned with the Company's investors, owning over 10% of the Company's equity.

Forward-Looking Statements & Coronavirus Risk

Certain statements in this release may constitute "forward-looking" statements. These statements are based on management's current opinions, expectations, beliefs, plans, objectives, assumptions or projections regarding future events or future results. These forward-looking statements are only predictions, not historical fact, and involve certain risks and uncertainties, as well as assumptions. Actual results, levels of activity, performance, achievements and events could differ materially from those stated, anticipated or implied by such forward-looking statements. While Ladder believes that its assumptions are reasonable, it is very difficult to predict the impact of known factors, and, of course, it is impossible to anticipate all factors that could affect actual results, including the impact of the COVID-19 pandemic on the Company's business. There are a number of risks and uncertainties that could cause actual results to differ materially from forward-looking statements made herein including, most prominently, the risks discussed under the heading "Risk Factors" in each of the Company's Annual Report on Form 10-K for the year ended December 31, 2019 and Quarterly Report on Form 10-Q for the period ended September 30, 2020, as well as its consolidated financial statements, related notes, and other financial information appearing therein, and its other filings with the U.S. Securities and Exchange Commission. Such forward-looking statements are made only as of the date of this release. Ladder expressly disclaims any obligation or undertaking to release any updates or revisions to any forward-looking statements contained herein to reflect any change in its expectations with regard thereto or changes in events, conditions, or circumstances on which any such statement is based.

Ladder Capital CorpConsolidated Balance Sheets(Dollars in Thousands)

December 31, December 31, 2020(1) 2019(1)



Assets

Cash and cash equivalents $ 1,254,432 $ 58,171

Restricted cash 29,852 297,575

Mortgage loan receivables held for investment, net, at amortized cost:

Mortgage loans receivable 2,354,059 3,257,036

Allowance for credit losses (41,507) (20,500)

Mortgage loan receivables held for sale 30,518 122,325

Real estate securities 1,058,298 1,721,305

Real estate and related lease intangibles, net 985,304 1,048,081

Investments in and advances to unconsolidated 46,253 48,433 joint ventures

FHLB stock 31,000 61,619

Derivative instruments 299 693

Accrued interest receivable 16,088 21,066

Other assets 116,633 53,348

Total assets $ 5,881,229 $ 6,669,152

Liabilities and Equity

Liabilities

Debt obligations, net $ 4,209,864 $ 4,859,873

Dividends payable 27,537 38,696

Accrued expenses 43,876 72,397

Other liabilities 51,527 59,209

Total liabilities 4,332,804 5,030,175

Commitments and contingencies - -

Equity

Class A common stock, par value $0.001 per share,600,000,000 shares authorized; 126,852,765 and 127 108 110,693,832 shares issued and 126,378,715 and107,509,563 shares outstanding

Class B common stock, par value $0.001 per share,100,000,000 shares authorized; zero and - 12 12,158,933 shares issued and outstanding

Additional paid-in capital 1,780,074 1,532,384

Treasury stock, 474,050 and 3,184,269 shares, at (62,859) (42,699) cost

Retained earnings (dividends in excess of (163,717) (35,746) earnings)

Accumulated other comprehensive income (loss) (10,463) 4,218

Total shareholders' equity 1,543,162 1,458,277

Noncontrolling interest in operating partnership - 172,054

Noncontrolling interest in consolidated joint 5,263 8,646 ventures

Total equity 1,548,425 1,638,977

Total liabilities and equity $ 5,881,229 $ 6,669,152

(1)

Includes amounts relating to consolidated variable interest entities.

Ladder Capital CorpConsolidated Statements of Income(Dollars in Thousands, Except Per Share and Dividend Data)

(1) Includes amounts relating to consolidated variable interest entities.

Ladder Capital CorpConsolidated Statements of Income(Dollars in Thousands, Except Per Share and Dividend Data)

Year Ended December 31,

2020 2019 2018



Net interest income

Interest income $ 239,849 $ 330,235 $ 344,816

Interest expense 227,474 204,353 194,291

Net interest income 12,375 125,882 150,525

Provision for (release of) loan 18,275 2,600 13,900 loss reserves

Net interest income (expense)after provision for (release of) (5,900) 123,282 136,625 loan losses



Other income (loss)

Operating lease income 100,248 106,366 106,177

Sale of loans, net (1,571) 54,758 16,511

Realized gain (loss) on securities (12,410) 14,911 (5,808)

Unrealized gain (loss) on equity (132) 1,737 (1,605) securities

Unrealized gain (loss) on Agency 263 84 555 interest-only securities

Realized gain (loss) on sale of 32,102 1,392 95,881 real estate, net

Impairment of real estate - (1,350) -

Fee and other income 12,654 24,403 26,285

Net result from derivative (15,270) (30,011) 15,926 transactions

Earnings (loss) from investment in 1,821 3,432 790 unconsolidated joint ventures

Gain (loss) on extinguishment/ 22,250 (1,070) (4,392) defeasance of debt

Total other income (loss) 139,955 174,652 250,320

Costs and expenses

Salaries and employee benefits 58,101 67,768 60,117

Operating expenses 20,294 22,595 21,696

Real estate operating expenses 28,584 23,323 29,799

Fee expense 7,244 6,090 5,055

Depreciation and amortization 39,079 38,511 41,959

Total costs and expenses 153,302 158,287 158,626

Income (loss) before taxes (19,247) 139,647 228,319

Income tax expense (benefit) (9,789) 2,646 6,643

Net income (loss) (9,458) 137,001 221,676

Net (income) loss attributable tononcontrolling interest in (5,544) 694 (15,864) consolidated joint ventures

Net (income) loss attributable tononcontrolling interest in 557 (15,050) (25,797) operating partnership

Net income (loss) attributable to $ (14,445) $ 122,645 $ 180,015 Class A common shareholders



Earnings per share:

Basic $ (0.13) $ 1.16 $ 1.85

Diluted $ (0.13) $ 1.15 $ 1.84



Weighted average shares outstanding:

Basic 112,409,615 105,455,849 97,226,027

Diluted 112,409,615 106,399,783 97,652,065



Dividends per share of Class A $ 0.940 $ 1.360 $ 1.535 common stock:

Non-GAAP Financial Measures

For the fourth quarter of 2020, the Company began utilizing distributable earnings, distributable EPS, and after-tax distributable return on average equity ("ROAE"), non-GAAP financial measures, as supplemental measures of our operating performance. We believe distributable earnings, distributable EPS, and after-tax distributable ROAE assist investors in comparing our operating performance and our ability to pay dividends across reporting periods on a more relevant and consistent basis by excluding from GAAP measures certain non-cash expenses and unrealized results as well as eliminating timing differences related to securitization gains and changes in the values of assets and derivatives. In addition, we use distributable earnings, distributable EPS and distributable ROAE: (i) to evaluate our earnings from operations, (ii) because management believes that it may be a useful performance measure for us and (iii) our board of directors considers distributable earnings in determining the amount of quarterly dividends. Distributable earnings replaced our prior presentation of core earnings, and core earnings presentations from prior reporting periods have been recast as distributable earnings.

We define distributable earnings as income before taxes adjusted for: (i) real estate depreciation and amortization; (ii) the impact of derivative gains and losses related to the hedging of assets on our balance sheet as of the end of the specified accounting period; (iii) unrealized gains/(losses) related to our investments in fair value securities and passive interest in unconsolidated joint ventures; (iv) economic gains on loan sales not recognized under GAAP accounting for which risk has substantially transferred during the period and the exclusion of resultant GAAP recognition of the related economics during the subsequent periods; (v) unrealized provision for loan losses and unrealized real estate impairment; (vi) realized provisions for loan losses and realized real estate impairment; (vii) non-cash stock-based compensation; and (viii) certain transactional items. For the purpose of computing distributable earnings, management recognizes loan and real estate losses as being realized generally in the period in which the asset is sold or the Company determines a decline in value to be non-recoverable and the loss to be nearly certain.

Distributable EPS is defined as after-tax distributable earnings divided by the adjusted weighted average diluted shares outstanding during the period. The adjusted weighted average diluted shares outstanding is defined as the GAAP weighted average diluted shares outstanding, adjusted for shares issuable upon conversion of all Class B shares, if excluded from the GAAP measure because they would have an anti-dilutive effect. The inclusion of shares issuable upon conversion of Class B shares is consistent with the inclusion of income attributable to noncontrolling interest in operating partnership in distributable earnings and after-tax distributable earnings. As of September 30, 2020, all Class B shares had been converted into Class A shares.

For distributable earnings, we include adjustments for economic gains on loan sales not recognized under GAAP accounting for which risk has substantially transferred during the period and exclusion of resultant GAAP recognition of the related economics during the subsequent periods. This adjustment is reflected in distributable earnings when there is a true risk transfer on the mortgage loan transfer and settlement. Historically, this adjustment has represented the impact of economic gains/(discounts) on intercompany loans secured by our own real estate which we had not previously recognized because such gains were eliminated in consolidation. Conversely, if the economic risk was not substantially transferred, no adjustments to net income would be made relating to those transactions for distributable earnings purposes. Management believes recognizing these amounts for distributable earnings purposes in the period of transfer of economic risk is a reasonable supplemental measure of our performance.

We do not designate derivatives as hedges to qualify for hedge accounting and therefore any net payments under, or fluctuations in the fair value of, our derivatives are recognized currently in our income statement. However, fluctuations in the fair value of the related assets are not included in our income statement. We consider the gain or loss on our hedging positions related to assets that we still own as of the reporting date to be "open hedging positions." While recognized for GAAP purposes, we exclude the results on the hedges from distributable earnings until the related asset is sold and the hedge position is considered "closed," whereupon they would then be included in distributable earnings in that period. These are reflected as "Adjustments for unrecognized derivative results" for purposes of computing distributable earnings for the period. We believe that excluding these specifically identified gains and losses associated with the open hedging positions adjusts for timing differences between when we recognize changes in the fair values of our assets and changes in the fair value of the derivatives used to hedge such assets.

Our investments in Agency interest-only securities and equity securities are recorded at fair value with changes in fair value recorded in current period earnings. We believe that excluding these specifically identified gains and losses associated with the fair value securities adjusts for timing differences between when we recognize changes in the fair values of our assets. With regard to securities valuation, distributable earnings includes a decline in fair value deemed to be an other-than-temporary impairment for GAAP purposes only if the decline is determined to be nearly certain to be eventually realized. In those cases, an impairment is included in distributable earnings for the period in which such determination was made.

Our results of operations in the second quarter of 2020 were significantly impacted by the actions we took to generate liquidity and pay down mark-to-market debt in direct response to the unfavorable market conditions that occurred near the onset of the COVID-19 pandemic. The actions taken by management had multiple impacts on distributable earnings, distributable EPS and after-tax distributable ROAE for the three months ended June 30, 2020. Management believes the actions taken were prompted by the unusual market conditions and therefore outside of Ladder's main operations. Management believes adjusting for certain transactional charges/gains related to the impact of COVID-19 on its performance measures provides a more useful guide to assess the ongoing main operations of the Company.

Set forth below is an unaudited reconciliation of net income to after-tax distributable earnings, and an unaudited computation of distributable EPS (in thousands, except per share data):

Three Months Ended Year Ended December 31, December 31,

2020 2019 2020 2019



Net income (loss) $ (11,583) $ 45,452 $ (9,458) $ 137,001

Income tax expense (4,712) 2,169 (9,789) 2,646 (benefit)

Income (loss) before (16,295) 47,621 (19,247) 139,647 taxes

Net (income) lossattributable tononcontrolling interest (131) (4) (5,559) 663 in consolidated jointventures (GAAP)(1)

Our share of real estatedepreciation, 7,710 8,202 22,493 27,201 amortization and gainadjustments (2)

Adjustments forunrecognized derivative (1,999) (10,688) 2,738 2,502 results (3)

Unrealized (gain) loss on (79) (452) (225) (1,927) fair value securities

Adjustment for economicgain on loan sales notrecognized under GAAP forwhich risk has been 410 172 912 (645) substantiallytransferred, net ofreversal/amortization

Adjustment for impairment (6,215) - 9,125 - (4)

Non-cash stock-based 22,204 3,734 41,761 23,118 compensation

Transactional adjustments(response to COVID-19 and (680) - 16,259 - other) (5)

Distributable earnings 4,925 48,585 68,257 190,559

Estimated corporate tax 1,520 (1,556) 3,502 (794) benefit (expense)(6)

After-tax distributable $ 6,445 $ 47,029 $ 71,759 $ 189,765 earnings

Adjusted weighted averagediluted shares 118,890 118,862 118,712 118,944 outstanding(7)

Distributable EPS $ 0.05 $ 0.40 $ 0.60 $ 1.60

(1)

Prior to the final exchanges of the Continuing LCFH Limited Partners into Class A shares in the third quarter of 2020, we considered the Class A common shareholders of the Company and Continuing LCFH Limited Partners to have had fundamentally equivalent interests in our pre-tax earnings. Accordingly, for purposes of computing distributable earnings we start with pre-tax earnings and adjust for other noncontrolling interest in consolidated joint ventures, but we did not adjust for amounts attributable to noncontrolling interest held by Continuing LCFH Limited Partners. As of December 31, 2020, there are no remaining Continuing LCFH Limited Partners. Amount includes $4 thousand and $16 thousand of net income which are included in net (income) loss attributable to noncontrolling interest in operating partnership on the consolidated statements of income for the three and twelve months ended December 31, 2020, respectively. Amount includes $7 thousand and $31 thousand of net income which are included in net (income) loss attributable to noncontrolling interest in operating partnership on the consolidated statements of income for the three and twelve months ended and December 31, 2019, respectively.

Prior to the final exchanges of the Continuing LCFH Limited Partners into Class A shares in the third quarter of 2020, we considered the Class A common shareholders of the Company and Continuing LCFH Limited Partners to have had fundamentally equivalent interests in our pre-tax earnings. Accordingly, for purposes of computing distributable earnings we start with pre-tax earnings and adjust for other noncontrolling interest in consolidated joint ventures, but we did not adjust for amounts attributable to noncontrolling interest held by Continuing LCFH Limited(1) Partners. As of December 31, 2020, there are no remaining Continuing LCFH Limited Partners. Amount includes $4 thousand and $16 thousand of net income which are included in net (income) loss attributable to noncontrolling interest in operating partnership on the consolidated statements of income for the three and twelve months ended December 31, 2020, respectively. Amount includes $7 thousand and $31 thousand of net income which are included in net (income) loss attributable to noncontrolling interest in operating partnership on the consolidated statements of income for the three and twelve months ended and December 31, 2019, respectively.

The following is a reconciliation of GAAP depreciation and amortization(2) to our share of real estate depreciation, amortization and gain adjustments presented in the computation of distributable earnings in the preceding table ($ in thousands):

Three Months Ended Year Ended December 31, December 31,

2020 2019 2020 2019



Total GAAP depreciation and $ 9,437 $ 9,319 $ 39,079 $ 38,511 amortization

Less: Depreciation and amortization related to (25) (25) (99) (99) non-rental property fixed assets

Less: Non-controlling interest in consolidated joint ventures' share of accumulated depreciation and (1,087) (444) (2,377) (2,836) amortization and unrecognized passive interest in unconsolidated joint ventures

Our share of real estate 8,325 8,850 36,603 35,576 depreciation and amortization



Realized gain from accumulated depreciation and (101) (158) (14,677) (6,997) amortization on real estate sold (refer to below)

Less: Non-controlling interest in consolidated joint ventures' share of - 1 2,667 84 accumulated depreciation and amortization on real estate sold

Our share of accumulated depreciation and amortization (101) (157) (12,010) (6,913) on real estate sold



Less: Operating lease income on above/below market lease (514) (491) (2,100) (1,462) intangible amortization



Our share of real estate depreciation, amortization $ 7,710 $ 8,202 $ 22,493 $ 27,201 and gain adjustments

GAAP gains/losses on sales of real estate include the effects of previously recognized real estate depreciation and amortization. For purposes of distributable earnings, our share of real estate depreciation and amortization is eliminated and, accordingly, the resultant gains/losses also must be adjusted. Following is a reconciliation of the related consolidated GAAP amounts to the amounts reflected in distributable earnings ($ in thousands):

Three Months Ended Year Ended December December 31, 31,

2020 2019 2020 2019



GAAP realized gain (loss) on sale $ (14) $ 429 $ 32,102 $ 1,392 of real estate, net

Adjusted gain/loss on sale of real estate for purposes of 115 (272) (20,092) 5,521 distributable earnings

Our share of accumulated depreciation and amortization on $ 101 $ 157 $ 12,010 $ 6,913 real estate sold

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

Three Months Ended Year Ended December 31, December 31,

2020 2019 2020 2019



Net results from $ 718 $ 5,946 $ (15,270) $ (30,011) derivative transactions

Hedging interest expense 1,281 233 2,309 2,161

Hedging realized result - 4,509 10,223 25,348

Adjustments for unrecognized derivative $ 1,999 $ 10,688 $ (2,738) $ (2,502) results

(4)

For the three months ended 2020, the Company recorded a net release of CECL provision for loan loss of $5.1 million, of which included an increase of $1.2 million of asset-specific reserve that was determined to be non-recoverable. For the year ended 2020, the Company recorded a total CECL provision for loan loss of $18.3 million, of which $9.2 million was determined to be non-recoverable. The adjustments reflect the portion of such loan loss provision that management has determined to be recoverable. Prior to the January 1, 2020 implementation of CECL, all GAAP provisions for loan loss had been included in the computation of distributable earnings.

(5)

The impact from COVID-19 included adjustments related to the unusual market conditions and actions taken by management including: (a) $6.7 million of losses from sales of performing first mortgage loans included in sale of loans, net, (b) $15.4 million of losses from sales of CMBS, (c) $3.7 million of loss from conduit loan sales, (d) $6.5 million of prepayment penalties related to paydowns of mark-to-market debt included in interest expense, (e) $2.1 million of professional fee expenses included in operating expenses and (f) $0.2 million of severance costs included in salaries and employee benefits. The $34.5 million total of the preceding amounts was partially offset by (g) $19.0 million of gains from the repurchase of, and extinguishment of, unsecured corporate bond debt at a discount from par, net of (h) $1.5 million of accelerated premium amortization included in interest expense. The transactional adjustment includes one non-COVID-19 related item pertaining to $0.7 of income related to a tax settlement recognized in the fourth quarter of 2020. Set forth below is a reconciliation of certain of the above COVID-19 losses to the most comparable GAAP financial measure ($ in thousands):

For the three months ended 2020, the Company recorded a net release of CECL provision for loan loss of $5.1 million, of which included an increase of $1.2 million of asset-specific reserve that was determined to be non-recoverable. For the year ended 2020, the Company recorded a total CECL(4) provision for loan loss of $18.3 million, of which $9.2 million was determined to be non-recoverable. The adjustments reflect the portion of such loan loss provision that management has determined to be recoverable. Prior to the January 1, 2020 implementation of CECL, all GAAP provisions for loan loss had been included in the computation of distributable earnings.

The impact from COVID-19 included adjustments related to the unusual market conditions and actions taken by management including: (a) $6.7 million of losses from sales of performing first mortgage loans included in sale of loans, net, (b) $15.4 million of losses from sales of CMBS, (c) $3.7 million of loss from conduit loan sales, (d) $6.5 million of prepayment penalties related to paydowns of mark-to-market debt included in interest expense, (e) $2.1 million of professional fee expenses included in operating expenses and (f) $0.2 million of severance costs included in(5) salaries and employee benefits. The $34.5 million total of the preceding amounts was partially offset by (g) $19.0 million of gains from the repurchase of, and extinguishment of, unsecured corporate bond debt at a discount from par, net of (h) $1.5 million of accelerated premium amortization included in interest expense. The transactional adjustment includes one non-COVID-19 related item pertaining to $0.7 of income related to a tax settlement recognized in the fourth quarter of 2020. Set forth below is a reconciliation of certain of the above COVID-19 losses to the most comparable GAAP financial measure ($ in thousands):

Year ended

December 31, 2020

(b) Losses from sales of CMBS

Loss on sale of securities - COVID-19 related $ (14,670)

Hedge (loss) related to sale of securities, included in net (698) results from derivative transactions

Losses from sales of CMBS $ (15,368)



(c) Losses from conduit loan sales

Income from sales of loans, net - COVID-19 related $ (1,680)

Hedge (loss) related to sales of loans, included in net results (1,994) from derivative transactions

Losses from conduit loan sales $ (3,674)

(6)

Estimated corporate tax benefit (expense) is based on effective tax rate applied to distributable earnings generated by the activity within our taxable REIT subsidiary.

Estimated corporate tax benefit (expense) is based on effective tax rate(6) applied to distributable earnings generated by the activity within our taxable REIT subsidiary.

Set forth below is an unaudited reconciliation of weighted average diluted(7) shares outstanding to adjusted weighted average diluted shares outstanding (in thousands):

Three Months Ended Year Ended December December 31, 31,

2020 2019 2020 2019



Weighted average diluted shares 118,890 118,862 112,410 106,400 outstanding

Weighted average shares issuable to converted Class B - - 6,302 12,544 shareholders

Adjusted weighted average 118,890 118,862 118,712 118,944 diluted shares outstanding

After-tax distributable ROAE is presented on an annualized basis and is defined as after-tax distributable earnings divided by the average total shareholders' equity and noncontrolling interest in operating partnership during the period. The inclusion of noncontrolling interest in operating partnership is consistent with the inclusion of income attributable to noncontrolling interest in operating partnership in after-tax distributable earnings. Set forth below is an unaudited computation of after-tax distributable ROAE ($ in thousands):

Three Months Ended Year Ended December 31, December 31,

2020 2019 2020 2019



After-tax distributable $ 6,445 $ 47,029 $ 71,759 $ 189,765 earnings

Average shareholders'equity and NCI in 1,529,833 1,630,367 1,524,596 1,633,954 operating partnership

After-tax distributable 1.7 % 11.5 % 4.7 % 11.6 %ROAE

Non-GAAP Measures - Limitations

Our non-GAAP financial measures have limitations as analytical tools. Some of these limitations are:

* distributable earnings, distributable EPS and after-tax distributable ROAE do not reflect the impact of certain cash charges resulting from matters we consider not to be indicative of our ongoing operations and are not necessarily indicative of cash necessary to fund cash needs; * distributable EPS and after-tax distributable ROAE are based on a non-GAAP estimate of our effective tax rate, including the impact of Unincorporated Business Tax and the impact of our election to be taxed as a REIT effective January 1, 2015, assuming the conversion of all shares of Class B common stock into shares of Class A common stock. Our actual tax rate may differ materially from this estimate; and * other companies in our industry may calculate non-GAAP financial measures differently than we do, limiting their usefulness as comparative measures.

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

In addition, distributable earnings should not be considered to be the equivalent to REIT taxable income calculated to determine the minimum amount of dividends the Company is required to distribute to shareholders to maintain REIT status. In order for the Company to maintain its qualification as a REIT under the Code, we must annually distribute at least 90% of our REIT taxable income. The Company has declared, and intends to continue declaring, regular quarterly distributions to its shareholders in an amount approximating the REIT's net taxable income.

In the future, we may incur gains and losses that are the same as or similar to some of the adjustments in this presentation. Our presentation of non-GAAP financial measures should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.

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CONTACT: Investors Ladder Capital Corp Investor Relations (917) 369-3207 investor.relations@laddercapital.com