Ladder Capital Corp · NYSE:LADR
Ladder Capital — Investor Presentation (November 2019)
40 slides from Ladder Capital's investor presentation, November 2019
Slide 1: Investor Presentation
INVESTOR PRESENTATION NOVEMBER 2019 NYSE: LADR A Leading Commercial Mortgage REIT
Slide 2: Disclaimers
DISCLAIMERS This presentation contains forward-looking statements regarding possible or assumed future results of the business, financial condition, plans and objectives of Ladder Capital Corp and its subsidiaries and affiliates (collectively, “Ladder Capital,” “Ladder,” “LADR,” or the “Company”). A
Slide 3: Ladder Capital – A Leader in Commercial Real Estate Finance
LADDER CAPITAL – A LEADER IN COMMERCIAL REAL ESTATE (“CRE”) FINANCE NYSE: LADR – $2.0B EQUITY MARKET CAP 1 MULTI-CYLINDER PLATFORM WITH CORE COMPETENCY OF CRE CREDIT UNDERWRITING INVESTMENTS IN CRE LOANS, SECURITIES AND EQUITY WITH A SENIOR SECURED FOCUS – 79% OF TOTAL ASSETS ARE SENIOR SECURED THRE
Slide 4: Ladder Highlights
LADDER HIGHLIGHTS Only internally-managed CRE finance REIT of scale – fully aligned with shareholders Strongest Shareholder Management and directors own ~$230 million of equity in the company (11.3% of total market cap) Alignment Among Peers Compensate personnel based on profitability, and in
Slide 5: Best-in-Class Team of Seasoned Leaders
BEST-IN-CLASS TEAM OF SEASONED LEADERS ✓ All members of executive team joined Ladder in its first year of inception and possess an average of over 26 years of management experience and thought leadership through multiple market cycles ✓ Managers average 9 years’ tenure at Ladder and 20 years of indu
Slide 6: Fully Integrated CRE Investment Team
FULLY INTEGRATED CRE INVESTMENT TEAM ✓ Significant investment in recruiting and retaining talent for long-term succession planning ✓ ~30% of employees have been with Ladder at least 7 years ✓ ~50% of employees have been with Ladder at least 5 years 35 LEGEND Brian Harris CEO Managing Director # year
Slide 7: Investment & Risk Management Process
INVESTMENT & RISK MANAGEMENT PROCESS ✓ Separate departments function as “check & balance” on internal process ✓ Over 1,000 loans originated since inception with only 1 principal loss Origination Credit/ Transaction Investment Asset Underwriting Management Committee Management 22 originators, Ind
Slide 8: Consistently Profitable Track Record
CONSISTENTLY PROFITABLE TRACK RECORD Commercial real estate finance groups led by members of the Ladder Capital team have a consistent track record of profitability, and have never experienced a losing quarter ($mm) $400 $369 $350 $339 $305 $310 $294 $303 $300 $285 $275 $261 $250 $250 $234 $240 $200
Slide 9: Core Competency: CRE Credit Underwriting
CORE COMPETENCY: CRE CREDIT UNDERWRITING Three complementary, synergistic products within a relative-value, risk-adjusted return investment approach Loans $3.4 Billion Fixed and floating-rate senior Loans first mortgage loans secured by commercial real estate properties Securities $1.9 Billion CRE P
Slide 10: Loans
LOANS Commercial mortgage loan portfolio with a national footprint – consistent source of recurring net interest income Office Multifamily 22% 30% U $3.4B Mixed Portfolio Use 13% Retail 8% MHP Hotel 3% 17% Industrial Other 4% 3% Loan Portfolio Metrics Average Loan Size $18 million Middle-market fo
Slide 11: Selected Commercial Mortgage Loans
SELECTED COMMERCIAL MORTGAGE LOANS 1 2 3 4 1 $74 Million - Bank of America, Jacksonville, FL 2-yr floating-rate bridge loan to acquire and lease up downtown property. Initial funding of $66 million to close the acquisition and $8 million to lease up 2 $18 Million - Golden Belt, Durham, NC 3-yr float
Slide 12: Maintained Disciplined Lending Approach While Growing Loan Portfolio
MAINTAINED DISCIPLINED LENDING APPROACH WHILE GROWING LOAN PORTFOLIO First Mortgage Loans as % of Total Loan Portfolio Average Loan Size ($mm) 100% $25 92% 93% 95% 96% $21 88% $20 75% $18 $18 $18 $16 $15 50% $10 25% $5 0% $0 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 Gross Loan Portfolio Bala
Slide 13: Conduit Loans
CONDUIT LOANS A consistent ROE enhancer & source of retained earnings 62 of 63 profitable Top 10 CMBS loan contributor transactions 1 $688 million of Partners include Citi, Credit Suisse, Deutsche cumulative core gains 2 Bank, J.P. Morgan, UBS and Wells Fargo $15.9 billion of total Short holding per
Slide 14: Securities
SECURITIES Short duration, highly-rated portfolio is a strong source of liquidity Portfolio Metrics (as of 09/30/2019) CMBS Bond Portfolio Ratings (as of 09/30/2019) CMBS & Other Securities on Balance Sheet $1.9 billion % Investment Grade-Rated 98% AAA / Aaa AA / Aa % AAA-Rated 86% 88% 10% A/A 1% We
Slide 15: CRE Equity
CRE EQUITY Source of stable recurring net rental income with potential NAV upside Portfolio Metrics (as of 09/30/2019) CRE Equity Assets by Property Type (as of 09/30/2019) Undepreciated Asset Carrying Value $1.2 billion Wholesale Club Office 12% Net Equity Invested (Undepreciated) $455 million 28%
Slide 16: Revenue Has Shifted to Durable, Predictable and Recurring Sources
REVENUE HAS SHIFTED TO DURABLE, PREDICTABLE AND RECURRING SOURCES ✓ 77% of Ladder’s 2018 net revenues 1 were driven by recurring sources of revenue, including balance sheet loans, securities, and CRE equity net rental income & NOI; this metric has increased to 89% for the 09/30/2019 LTM period ✓ Gai
Slide 17: Illustrative Returns
ILLUSTRATIVE RETURNS Weighted-Average Illustrative Asset-Level Asset Type Segment Return on Asset Levered Return1 Balance Sheet First Mortgage Loans Loans 6.0% – 8.0% 10.0% – 12.0% Mezzanine/Subordinate Loans Loans 10.5% – 13.5% 10.5% – 13.5% Net Leased CRE Equity CRE Equity 6.0% – 7.5% 9.5% – 10.5%
Slide 18: Best-in-Class Returns on Equity
BEST-IN-CLASS RETURNS ON EQUITY Core ROAE (after-tax) 1 14.9% 12.1% 11.9% 11.5% 10.7% Recurring 9% – 10% Earnings Sources 2015 2016 2017 2018 LTM 09/30/2019 Core Earnings ($mm) 1 : $191.5 $158.2 $178.8 $230.1 $194.5 Average Adjusted Leverage Ratio 1,2 : 2.8x 2.8x 2.7x 2.5x 2.6x Average Adjusted Leve
Slide 19: Superior Dividend Growth & Coverage
SUPERIOR DIVIDEND GROWTH & COVERAGE Annualized Cash Dividend per Share Dividend Coverage $1.66 $1.36 $1.36 Core EPS 2 $1.00 (LTM 9/30/19) Annual Cash Dividends per Share 1 Q1 2015 Q3 2019 7% dividend compounded growth rate Well-covered dividend – 82% payout ratio 1. Represents run-rate of current $0
Slide 20: Diverse and Robust Capital Base
DIVERSE AND ROBUST CAPITAL BASE Best-in-class capital structure, with focus on diversity, unsecured & non-recourse financing, and modest leverage Capitalization Summary ($mm) Key Capital Structure Highlights 81% of outstanding debt comprised of committed, term financing and unsecured bonds Committ
Slide 21: Long & Strong Liability Structure
LONG & STRONG LIABILITY STRUCTURE Superior access to capital with diversified financing sources and substantial liquidity ($ in millions) Weighted-Average Remaining Term 1 Issuance / Debt Facility Size Outstanding 2019 2020 2021 2022 2023 2024 2025 $400 $396 5.250% Unsecured Bonds 500 496 5.250% Uns
Slide 22: Debt Maturity Schedule by Year
DEBT MATURITY SCHEDULE BY YEAR Staggered maturity profile in place Unsecured & Secured Debt Maturities (as of 09/30/2019) ($ in millions) $1,000 $950 Unsecured Bonds 1 $900 $871 Secured Debt $800 $736 $708 $265 $700 $600 $581 $500 $492 $496 $400 $300 $606 $282 $396 $200 $193 $100 $240 $47 $96 $0 201
Slide 23: Ladder's Credit Ratings & Commentary
LADDER’S CREDIT RATINGS & COMMENTARY Moody’s Standard & Poor’s Fitch Corporate Family Rating Ba2i Corporate Family Rating BB- Corporate Family Rating BBi Senior Unsecured Ba3i Senior Unsecured BB- Senior Unsecured BBi Outlook Positive Outlook Stable Outlook Positive Selected Moody’s report commentar
Slide 24: Timeline of Key Ladder Milestones
TIMELINE OF KEY LADDER MILESTONES Ladder has consistently been a leader in the space with respect to financing diversity & overall balance sheet strength LAUNCH OF COMPANY FOUNDED FIRST UNSECURED LADDER WITH $611M OF SERIES BOND OFFERING SELECT BOND UPGRADES FIRST LADDER-ONLY A EQUITY DURING $325M (
Slide 25: We Have Done What We Said We Would Do
WE HAVE DONE WHAT WE SAID WE WOULD DO Preserve Principal Relentless focus on credit; over 1,000 loans originated since inception with only 1 principal loss Consistently Generate 9%–10% base-line ROE supplemented by conduit loan and CRE equity gains-on-sale Industry-Leading ROEs Build Best-in-Cla
Slide 26: Ladder Investment Thesis
LADDER INVESTMENT THESIS Complementary, synergistic Highly-experienced business lines – superior management team risk-adjusted returns Consistent industry-leading Only internally-managed ROEs of 10%–13% CRE finance REIT of scale Well-Covered, 8% Current Dividend Yield Most conservative dividend High
Slide 27: Company Information
COMPANY INFORMATION Ladder is an internally-managed real estate investment trust that is a leader in commercial real estate finance. Ladder originates and invests in a diverse portfolio of commercial real estate and real estate-related assets, focusing on senior secured assets. Ladder’s investment a
Slide 28: Appendix
APPENDIX
Slide 29: Ladder Financial Snapshot
LADDER FINANCIAL SNAPSHOT ($ in millions, except per share amounts) Snapshot of Business Lines Total Assets & Liabilities, Book Equity, Leverage and ROE Balance Sheet Loans Net Leased Commercial Real Estate (100% Owned) Total Assets Carrying Value of Assets $3,231 Carrying Value of Assets $669 Cash
Slide 30: Loan Portfolio Key Metrics
LOAN PORTFOLIO KEY METRICS Weighted- Weighted- Type of Loan Balance 1 % of Loan % of Total Business Average Average Loan ($mm) Portfolio Assets Plan Rate Coupon LTV Balance Sheet First Held for Generally $3,098 91.0% 46.8% 6.7% 70.0% Mortgage Loans investment floating-rate Conduit First Generally $1
Slide 31: CRE Equity Portfolio Key Metrics
CRE EQUITY PORTFOLIO KEY METRICS ($ in millions) Undepreciated Asset % of CRE Equity Non-Recourse Net Equity ~ Total In-Place Annual Weighted- Type of Asset Carrying Value Portfolio Mortgage Invested Square Net Operating Average Real Estate Value (Depreciated) (Undepreciated) Financing (Undepreciate
Slide 32: Net Leased CRE Portfolio Key Details
NET LEASED CRE PORTFOLIO KEY DETAILS BJ's Wholesale Bank of America Walgreens Dollar Hy-Vee Inc. Additional Net Total Net Leased / ($ in millions) Club Inc. Office Campus Co General Corp Supermarkets Leased Properties Weighted-Avg. (8 Buildings) (5 Buildings) (22 Buildings) (91 Buildings) (7 Buildin
Slide 33: Diversified CRE Portfolio Key Details
DIVERSIFIED CRE PORTFOLIO KEY DETAILS Richmond, VA Isla Vista, CA Miami, FL Additional Diversified Total Diversified CRE / ($ in millions) Office Portfolio Student Housing Multifamily Property CRE Properties Weighted-Avg. (19 Buildings) (40 Buildings) (1 Property) (7 Buildings1) (67 Buildings) Undep
Slide 34: Interest Rate Sensitivity
INTEREST RATE SENSITIVITY Earnings Correlation to Changes in Interest Rates $0.03 $0.01 ($0.00) ($0.00) Estimated quarterly change in net interest income per share with change in LIBOR of: (100 bps) (50 bps) 50 bps 100 bps 74% of loan portfolio comprised of floating-rate loans, all of which have int
Slide 35: Ladder Team Bios: Executive Team
LADDER TEAM BIOS: EXECUTIVE TEAM Industry Name Title Experience Previous Experience/Bios Brian Harris Founder & 35 years Prior to forming Ladder, Mr. Harris served as a Senior Partner and Head of Global Chief Executive Officer Commercial Real Estate at Dillon Read Capital Management, a wholly owned
Slide 36: Ladder Team Bios: Other Senior Executives
LADDER TEAM BIOS: OTHER SENIOR EXECUTIVES Industry Name Title Experience Previous Experience/Bios Michael Scarola Chief Credit Officer 21 years Prior to joining Ladder, Mr. Scarola served as Co-Head of Underwriting at UBS/Dillon Read Capital Management. Mr. Scarola received a B.S. from the Leonard N
Slide 37: Ladder Team Bios: Other Senior Executives (Cont.)
LADDER TEAM BIOS: OTHER SENIOR EXECUTIVES (CONT.) Industry Name Title Experience Previous Experience/Bios David Traitel Head of Legal Structuring 24 years Prior to joining Ladder, Mr. Traitel served as a Partner at Winston & Strawn LLP. Mr. Traitel received a B.A. from the University of Michigan and
Slide 38: Core Earnings and Net Revenues GAAP Reconciliation by Year
CORE EARNINGS AND NET REVENUES GAAP RECONCILIATION BY YEAR ($ in millions) FY 2018 FY 2017 FY 2016 FY 2015 FY 2014 FY 2013 FY 2012 FY 2011 FY 2010 FY 2009 Net income (loss) $221.7 $125.9 $113.7 $146.1 $28.4 $188.7 $169.5 $71.7 $91.0 $42.4 Income tax expense (benefit) 6.6 7.7 6.3 14.6 96.3 3.7 2.6 1.
Slide 39: Selected Definitions
SELECTED DEFINITIONS • Adjusted Leverage Ratio (non-GAAP) ̶ Total debt obligations, net of deferred financing costs, adjusted for non-recourse indebtedness related to securitizations that is consolidated on our GAAP balance sheet and liability for transfers not considered sales, divided by GAAP tota
Slide 40: Index of Slides
INDEX OF SLIDES Slide # Slide Contents Slide # Slide Contents 1 Cover 21 Long & Strong Liability Structure 2 Disclaimers 22 Debt Maturity Schedule 3 Ladder Snapshot 23 Credit Rating Summary & Commentary 4 Ladder Highlights 24 Timeline of Key Ladder Milestones 5 Executive Team & Other Senior Executiv
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