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Friday, 11/02/2018 3:24:21 PM

Friday, November 02, 2018 3:24:21 PM

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LADR Ladder Capital Corp Reports Third Quarter 2018 Results, Announces 4.6% Cash Dividend Increase and Declares Fourth Quarter 2018 Dividend to Holders of Class A Common Stock
4:29 pm ET November 1, 2018 (BusinessWire) Print
--GAAP disclosures for the third quarter:

--GAAP income before taxes of $84.7 million and diluted EPS of $0.67 Up from $29.2 million and $0.28 in the third quarter of 2017

--After-tax GAAP return on average equity of 20.0% Up from 8.3% in the third quarter of 2017

--GAAP book value per share of $13.82 at September30, 2018 Up from $13.43 at June 30, 2018

--Core (non-GAAP) disclosures for the third quarter:

--Core earnings of $63.4 million and core EPS of $0.59 Up from core earnings of $35.7 million and core EPS of $0.35 in the third quarter of 2017

--After-tax core return on average equity of 17.1% Up from 10.3% in the third quarter of 2017

--Undepreciated book value per share of $15.25 at September30, 2018 Up from $14.97 at June 30, 2018

--Operating and financing statistics for the third quarter:

--Declared a fourth quarter dividend of $0.57/share of Class A common stock, including $0.34 in cash and $0.23 in shares of Class A common stock, subject to stockholder elections The $0.34/share cash dividend reflects a 4.6% increase in the quarterly cash dividend rate, the sixth increase in four years, resulting in a $1.36/share annual cash dividend run rate

--Declared a third quarter dividend of $0.325/share of Class A common stock paid on October1, 2018

--Originated a total of $676.7 million of commercial mortgage loans, including $326.4 million of mortgage loans held for investment and $350.3 million of mortgage loans held for sale

--Received $113.4 million of net proceeds from sales of real estate resulting in a $63.7 million GAAP gain on sale

--Contributed $102.0 million of loans to 1 securitization transaction

Ladder Capital Corp (NYSE:LADR) ("we," "Ladder," or the "Company") today announced operating results for the quarter ended September30, 2018. GAAP income before taxes for the three and nine months ended September30, 2018 was $84.7 million and $200.5 million, respectively compared to $29.2 million and $85.2 million for the three and nine months ended September30, 2017, respectively. The favorable third quarter year over year earnings variance reflects higher gain on sale of real estate partially offset by lower realized gain (loss) on sale of securities and a higher provision for loan losses. The Diluted EPS for the three and nine months ended September30, 2018 was $0.67 and $1.61, respectively, compared to $0.28 and $0.74 for the three and nine months ended September30, 2017, respectively. After-tax GAAP return on average equity was 20.0% in the third quarter of 2018.

Core earnings, a non-GAAP financial measure, was $63.4 million for the third quarter of 2018, compared to $35.7 million earned in the third quarter of 2017. For the nine months ended September30, 2018, core earnings was $177.6 million compared to $118.4 million for the comparable period in 2017. The results of the three months ended September30, 2018 surpassed the comparable period in the prior year primarily due to higher gains on sales of real estate partially offset by higher provision for loan losses. Core EPS, a non-GAAP financial measure, was $0.59 for the third quarter of 2018 and $1.59 for the nine months ended September30, 2018, compared to $0.35 and $1.08 for the three and nine months ended September30, 2017, respectively. We believe core earnings and core EPS are useful in evaluating our earnings from operations across reporting periods as discussed in the Non-GAAP Financial Measures section of this earnings release.

In the third quarter of 2018, we sold 8 condo units and a portfolio of 4 single tenant commercial office properties located in St. Paul, MN for total net proceeds of $113.4 million. We acquired the office portfolio in September 2014 with a joint venture partner for an initial cash investment of $69.5 million and increased value through strategic capital improvements and lease extensions, selling the portfolio for a gross sale price of $113.5 million in September 2018. The sales of real estate during the quarter resulted in a GAAP gain of $63.7 million, although the core earnings impact of the sales was partially offset by accumulated depreciation and amortization, the portion of gain attributable to non-controlling interests in the joint ventures, and other transaction related expenses.

Dividend Announcement

Ladder today announced the declaration by its Board of Directors ("Board") of a fourth quarter 2018 dividend of $0.57 per share of Class A common stock.

This declaration reflects a 4.6% increase in Ladder's recurring quarterly cash dividend, effective in the current quarter, to $0.34 per share from $0.325 per share.

The fourth quarter dividend also includes an additional year-end distribution attributable to our 2018 REIT taxable income of approximately $0.23 per share of Class A common stock. As discussed below, the full fourth quarter dividend of $0.57 per share will be paid in a combination of cash and stock on January24, 2019 to stockholders of record as of the close of business on December10, 2018.

Stockholders may elect to receive the fourth quarter 2018 dividend in all cash, or all shares of Ladder's Class A common stock. Election forms and materials will be mailed to registered shareholders promptly after December10, 2018, and will be due by January 10, 2019. Stockholders who do not return an election form, or who otherwise fail to properly complete an election form, will be deemed to have elected to receive all shares of Ladder's Class A common stock.

In no event will any stockholder electing to receive all cash receive less than $0.34 per share of such stockholder's dividend in cash. The Board currently intends to continue paying a regular cash dividend of at least $0.34 per share in subsequent quarters, subject to business and market conditions and future Board approvals.

The total amount of cash payable to all stockholders will be equal to $0.34 multiplied by the total outstanding shares of Class A common stock as of December10, 2018 (the "Cash Amount"). If the aggregate amount of cash to be distributed to stockholders electing to receive the dividend in all cash exceeds the Cash Amount, then the Cash Amount will be prorated among such stockholders, and the remaining portion of the fourth quarter 2018 dividend will be paid to such stockholders in shares of Ladder's Class A common stock plus cash in lieu of any fractional shares.

The total number of shares of Class A common stock to be distributed pursuant to the fourth quarter 2018 dividend will be determined based on stockholder elections and the volume weighted average price per share of Class A common stock on the New York Stock Exchange for the three trading days after the date that election forms are due. Shares of Class A common stock distributed as part of Ladder's fourth quarter 2018 dividend shall accrue dividend and other benefits together with all other shares of Ladder's Class A common stock.

Portfolio Overview

The following table summarizes the book value of our investment portfolio as of the dates indicated below ($ in thousands):

September 30, 2018 December 31, 2017
--------------------------------------- ----------------------------------------
Loans
Balance sheet loans:
Balance sheet first mortgage loans $ 3,647,710 56.8 % $ 3,123,268 51.9 %
Other commercial real estate-related loans 157,677 2.5 % 159,194 2.6 %
Provision for loan losses (17,600 ) (0.3 )% (4,000 ) (0.1 )%
------------------ -------------- --- -------------------- -------------- --
Total balance sheet loans 3,787,787 59.0 % 3,278,462 54.4 %
Conduit first mortgage loans 375,162 5.8 % 230,180 3.8 %
--------------- -------------- --- ------------------ -------------- --
Total loans 4,162,949 64.8 % 3,508,642 58.2 %
Securities
CMBS investments 940,379 14.6 % 1,066,570 17.7 %
U.S. Agency Securities investments 36,682 0.6 % 39,947 0.7 %
Corporate bonds 1,228 -- % -- -- %
--------------- -------------- --- ------------------ -------------- --
Total securities 978,289 15.2 % 1,106,517 18.4 %
Real Estate
Real estate and related lease intangibles, net 1,000,010 15.6 % 1,032,041 17.1 %
--------------- -------------- --- ------------------ -------------- --
Total real estate 1,000,010 15.6 % 1,032,041 17.1 %
Other Investments
Investments in unconsolidated joint ventures 36,100 0.6 % 35,441 0.6 %
FHLB stock 57,915 0.9 % 77,915 1.3 %
--------------- -------------- --- ------------------ -------------- --
Total other investments 94,015 1.5 % 113,356 1.9 %
--------------- -------------- --- ------------------ -------------- --
Total investments 6,235,263 97.1 % 5,760,556 95.6 %
Cash, cash equivalents and restricted cash 84,913 1.3 % 182,683 3.0 %
Other assets 105,569 1.6 % 82,376 1.4 %
--------------- -------------- --- ------------------ -------------- --
Total assets $ 6,425,745 100.0 % $ 6,025,615 100.0 %
==== ========= ============== === ======= ========= ============== ==
Note: CMBS investments and U.S. Agency Securities are carried at fair value.

During the three months ended September 30, 2018, as part of our regular evaluation of the value of the underlying collateral of our loans, management identified one loan as potentially impaired. Based on our review, we recorded a $10.0 million specific loan loss provision related to this loan.

Liquidity and Capital Resources

On July 20, 2018, we executed an amendment of one of our committed loan repurchase facilities to extend the term of the facility to 3 years from the date of the amendment and to add a 1-year extension term during which new advances are not permitted.

On September 14, 2018 and September 28, 2018 we amended our revolving credit facility to add two 1-year extension options to extend the final maturity date to February 2023, reduce the drawn cost of funds by 0.25%, add an additional member in the lenders' syndicate, and increase the aggregate maximum borrowings under the agreement by $25.0 million to $266.4 million.

The following table summarizes our debt obligations as of the following dates ($ in thousands):

September 30, 2018 December 31, 2017
-------------------- -------------------
Committed loan repurchase facilities $ 751,971 $ 398,653
Committed securities repurchase facility 97,921 --
Uncommitted securities repurchase facilities 123,725 74,757
-------------------- -------------------
Total repurchase facilities 973,617 473,410
Revolving credit facility -- --
Mortgage loan financing(1) 743,225 692,696
CLO debt(2) 672,001 688,479
Participation financing - mortgage loan receivable 2,516 3,107
Borrowings from the FHLB 1,212,000 1,370,000
Senior unsecured notes(3) 1,154,274 1,152,134
-------------------- -------------------
Total debt obligations $ 4,757,633 $ 4,379,826
========= ========= ======== =========
(1) Presented net of unamortized debt issuance costs of $1.0 million as
of September 30, 2018.
(2) Presented net of unamortized debt issuance costs of $3.5 million and
$6.0 million as of September 30, 2018 and December 31, 2017,
respectively.
(3) Presented net of unamortized debt issuance costs of $11.9 million
and $14.1 million at September 30, 2018 and December 31, 2017,
respectively.
Conference Call and Webcast

We will host a conference call on Thursday, November1, 2018 at 5:00 p.m. Eastern Time to discuss third quarter 2018 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, November1, 2018 through midnight Thursday, November 15, 2018. To access the replay, please call (844) 512-2921 domestic or (412) 317-6671 international, access code 13683758. The conference call will also be webcast though a link on Ladder Capital Corp

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