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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 
Form 10-Q
 
(Mark One)
 
☒    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended March 31, 20222023
 
Or
 
☐        TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from      to      
 
Commission file number:
001-36299
 
Ladder Capital Corp
ladrlogo3312017a27.jpg
(Exact name of registrant as specified in its charter)
 
Delaware80-0925494
(State or other jurisdiction of
incorporation or organization)		(IRS Employer
Identification No.)
345320 Park Avenue,New York,NY1015410022
(Address of principal executive offices)(Zip Code)
(212) 715-3170
(Registrant’s telephone number, including area code)
 
Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading Symbol(s)Name of Each Exchange on Which Registered
Class A common stock, $0.001 par valueLADRNew York Stock Exchange


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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  ☒  No  ☐
 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes  ☒  No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
 
Large accelerated filer☒Accelerated filer☐
    
Non-accelerated filer☐Smaller reporting company☐
Emerging growth company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): 
Yes ☐  No ☒
 
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.
 
Class Outstanding at April 22, 202221, 2023
Class A common stock, $0.001 par value 127,221,540126,948,532
Class B common stock, $0.001 par value —
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LADDER CAPITAL CORP
 
FORM 10-Q
March 31, 20222023
IndexPage
53
53
 
64
 
75
 
86
 
97
 
119
 
1311
5347
3479
3782
3782
3782
3882
3882
3882
3882
3882
3983
4084


 



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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
 
This Quarterly Report on Form 10-Q (this “Quarterly Report”) includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical fact contained in this Quarterly Report, including statements regarding our future results of operations and financial position, strategy and plans, and our expectations for future operations, are forward-looking statements. The words “anticipate,” “estimate,” “expect,” “project,” “plan,” “intend,” “believe,” “may,” “might,” “will,” “should,” “can have,” “likely,” “continue,” “design,” and other words and terms of similar expressions are intended to identify forward-looking statements.
 
We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, strategy, short-term and long-term business operations and objectives and financial needs. Although we believe that the expectations reflected in our forward-looking statements are reasonable, actual results could differ from those expressed in our forward-looking statements. Our future financial position and results of operations, as well as any forward-looking statements are subject to change and inherent risks and uncertainties. You should consider our forward-looking statements in light of a number of factors that may cause actual results to vary from our forward-looking statements including, but not limited to:
 
•risks discussed under the heading “Risk Factors” herein and in our Annual Report on Form 10-K for the year ended December 31, 20212022 (“the Annual Report”), as well as our consolidated financial statements, related notes, and the other financial information appearing elsewhere in this Quarterly Report and our other filings with the United States Securities and Exchange Commission (“SEC”(the “SEC”);
•the persistence of the COVID-19 pandemic, labor shortages, supply chain imbalances, Russia’s invasion ofcontinuing military actions between Russia and Ukraine, inflation, and inflation;the potential for a global economic recession;
•changes in general economic conditions in our industry and in the commercial finance and the real estate markets;
•changes to our business and investment strategy;
•our ability to obtain and maintain financing arrangements;
•the financing and advance rates for our assets, including the potential effects of the transition to Secured Overnight Financing Rate (“SOFR”) rates from London Interbank Offered Rate (“LIBOR”);
•our actual and expected leverage and liquidity;
•the adequacy of collateral securing our loan portfolio and a decline in the fair value of our assets;
•interest rate mismatches between our assets and our borrowings used to fund such investments;
•changes in interest rates andaffecting the market value of our assets;assets and the related impacts on our borrowers;
•changes in prepayment rates on our mortgages and the loans underlying our commercial mortgage-backed and other asset-backed securities;
•the effects of hedging instruments and the degree to which our hedging strategies may or may not protect us from interest rate and credit risk volatility;
•the increased rate of default or decreased recovery rates on our assets;
•the adequacy of our policies, procedures and systems for managing risk effectively;
•a potential downgrade in the credit ratings assigned to Ladder or our investments;
•our compliance with, and the impact of, and changes in laws, governmental regulations, tax laws and rates, accounting guidance and similar matters;
•our ability to maintain our qualification as a real estate investment trust (“REIT”) for U.S. federal income tax purposes and our ability and the ability of our subsidiaries to operate in compliance with REIT requirements;
•our ability and the ability of our subsidiaries to maintain our and their exemptions from registration under the Investment Company Act of 1940, as amended (the “Investment Company Act”);
•the effects of climate change or the potential liability relating to environmental matters that impact the value of properties we may acquire or the properties underlying our investments;
•the inability of insurance covering real estate underlying our loans and investments to cover all losses;
•the availability of investment opportunities in mortgage-related and real estate-related instruments and other securities;
•fraud by potential borrowers;
•the availability ofour ability to attract and retain qualified personnel;employees;
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•the impact of any tax legislation or IRS guidance;
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•volatility in the equity capital markets and the impact on our Class A common stock;
•the degree and nature of our competition; and
•the market trends in our industry, interest rates, real estate values and the debt securities markets.
 
You should not rely upon forward-looking statements as predictions of future events. In addition, neither we nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. The forward-looking statements contained in this Quarterly Report are made as of the date hereof, and the Company assumes no obligation to update or supplement any forward-looking statements.
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REFERENCES TO LADDER CAPITAL CORP
Ladder Capital Corp is a holding company, and its primary assets are a controlling equity interest in Ladder Capital Finance Holdings LLLP (“LCFH” or the “Operating Partnership”) and in each series thereof, directly or indirectly. Unless the context suggests otherwise, references in this report to “Ladder,” “Ladder Capital,” the “Company,” “we,” “us” and “our” refer (1) prior to the February 2014 initial public offering (“IPO”) of the Class A common stock of Ladder Capital Corp and related transactions, to LCFH (“Predecessor”) and its consolidated subsidiaries and (2) after our IPO and related transactions, to Ladder Capital Corp and its consolidated subsidiaries.

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Part I - Financial Information

Item 1. Financial Statements (Unaudited)

The consolidated financial statements of Ladder Capital Corp and the notes related to the foregoing consolidated financial statements are included in this Item.
 
Index to Consolidated Financial Statements (Unaudited)
 
64
75
86
97
119
1311
1311
1412
1614
2118
20
23
2629
2831
32
33
34
35
3735
384
39
4044
4144
41
45
508
51
51
5246
5347




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Ladder Capital Corp
Consolidated Balance Sheets
(Dollars in Thousands)
March 31, 2022(1)December 31, 2021(1) March 31, 2023(1)December 31, 2022(1)
(Unaudited)(Unaudited)
AssetsAssets  Assets  
Cash and cash equivalentsCash and cash equivalents$431,762 $548,744 Cash and cash equivalents$626,139 $609,078 
Restricted cashRestricted cash63,462 72,802 Restricted cash25,158 50,524 
Mortgage loan receivables held for investment, net, at amortized cost:Mortgage loan receivables held for investment, net, at amortized cost:Mortgage loan receivables held for investment, net, at amortized cost:
Mortgage loans receivableMortgage loans receivable3,857,471 3,553,737 Mortgage loans receivable3,794,075 3,885,746 
Allowance for credit lossesAllowance for credit losses(32,332)(31,752)Allowance for credit losses(25,499)(20,755)
Mortgage loan receivables held for saleMortgage loan receivables held for sale53,901 — Mortgage loan receivables held for sale27,197 27,391 
Real estate securities662,942 703,280 
SecuritiesSecurities520,008 587,519 
Real estate and related lease intangibles, netReal estate and related lease intangibles, net792,857 865,694 Real estate and related lease intangibles, net693,266 700,136 
Real estate held for sale55,412 25,179 
Investments in and advances to unconsolidated joint ventures5,243 23,154 
Investments in and advances to unconsolidated venturesInvestments in and advances to unconsolidated ventures6,336 6,219 
Derivative instrumentsDerivative instruments234 402 Derivative instruments1,421 2,038 
Accrued interest receivableAccrued interest receivable14,450 13,645 Accrued interest receivable25,794 24,938 
Other assetsOther assets68,795 76,367 Other assets166,631 78,339 
Total assetsTotal assets$5,974,197 $5,851,252 Total assets$5,860,526 $5,951,173 
Liabilities and EquityLiabilities and Equity  Liabilities and Equity  
LiabilitiesLiabilities  Liabilities  
Debt obligations, netDebt obligations, net$4,343,311 $4,219,703 Debt obligations, net$4,082,428 $4,245,697 
Dividends payableDividends payable26,763 27,591 Dividends payable30,802 32,000 
Accrued expensesAccrued expenses42,028 40,249 Accrued expenses50,937 68,227 
Other liabilitiesOther liabilities52,938 50,090 Other liabilities167,805 71,688 
Total liabilitiesTotal liabilities4,465,040 4,337,633 Total liabilities4,331,972 4,417,612 
Commitments and contingencies (Note 18)— — 
Commitments and contingencies (Note 17)Commitments and contingencies (Note 17)— — 
EquityEquity  Equity  
Class A common stock, par value $0.001 per share, 600,000,000 shares authorized; 128,027,478 and 126,852,765 shares issued and 127,222,831 and 125,452,568 shares outstanding127 126 
Class A common stock, par value $0.001 per share, 600,000,000 shares authorized; 128,027,478 and 128,027,478 shares issued and 126,948,532 and 126,502,049 shares outstandingClass A common stock, par value $0.001 per share, 600,000,000 shares authorized; 128,027,478 and 128,027,478 shares issued and 126,948,532 and 126,502,049 shares outstanding127 127 
Additional paid-in capitalAdditional paid-in capital1,815,661 1,795,249 Additional paid-in capital1,835,957 1,826,833 
Treasury stock, 804,647 and 1,400,197 shares, at cost(88,258)(76,324)
Treasury stock, 1,078,946 and 1,525,429 shares, at costTreasury stock, 1,078,946 and 1,525,429 shares, at cost(105,738)(95,600)
Retained earnings (dividends in excess of earnings)Retained earnings (dividends in excess of earnings)(214,084)(207,802)Retained earnings (dividends in excess of earnings)(183,755)(177,005)
Accumulated other comprehensive income (loss)Accumulated other comprehensive income (loss)(10,753)(4,112)Accumulated other comprehensive income (loss)(17,524)(21,009)
Total shareholders’ equityTotal shareholders’ equity1,502,693 1,507,137 Total shareholders’ equity1,529,067 1,533,346 
Noncontrolling interests in consolidated joint ventures6,464 6,482 
Noncontrolling interests in consolidated venturesNoncontrolling interests in consolidated ventures(513)215 
Total equityTotal equity1,509,157 1,513,619 Total equity1,528,554 1,533,561 
Total liabilities and equityTotal liabilities and equity$5,974,197 $5,851,252 Total liabilities and equity$5,860,526 $5,951,173 
(1)Includes amounts relating to consolidated variable interest entities. Refer to Note 2 and Note 10.9.

Refer to the accompanying notes to consolidated financial statements.
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Ladder Capital Corp
Consolidated Statements of Income
(Dollars in Thousands, Except Per Share Data)
(Unaudited)
 Three Months Ended March 31,
 20222021
Net interest income  
Interest income$56,205 $39,287 
Interest expense47,035 45,973 
Net interest income9,170 (6,686)
Provision for (release of) loan loss reserves874 (4,251)
Net interest income (expense) after provision for (release of) loan losses8,296 (2,435)
Other income (loss)  
Real estate operating income26,354 24,159 
Sale of loans, net(949)— 
Realized gain (loss) on securities(96)579 
Unrealized gain (loss) on equity securities14 — 
Unrealized gain (loss) on Agency interest-only securities3 (20)
Realized gain (loss) on sale of real estate, net29,154 — 
Fee and other income7,194 3,284 
Net result from derivative transactions3,135 4,771 
Earnings (loss) from investment in unconsolidated joint ventures434 436 
Total other income (loss)65,243 33,209 
Costs and expenses  
Compensation and employee benefits29,864 9,533 
Operating expenses5,508 4,241 
Real estate operating expenses8,992 6,211 
Fee expense1,988 1,599 
Depreciation and amortization9,342 9,536 
Total costs and expenses55,694 31,120 
Income (loss) before taxes17,845 (346)
Income tax expense (benefit)(1,309)(778)
Net income (loss)19,154 432 
Net (income) loss attributable to noncontrolling interests in consolidated joint ventures(122)(240)
Net income (loss) attributable to Class A common shareholders$19,032 $192 
Earnings per share:  
Basic$0.15 $— 
Diluted$0.15 $— 
Weighted average shares outstanding:  
Basic124,305,943 123,974,970 
Diluted125,478,001 124,324,683 

 Three Months Ended March 31,
 20232022
Net interest income  
Interest income$103,796 $56,205 
Interest expense60,749 47,035 
Net interest income (expense)43,047 9,170 
Provision for (release of) loan loss reserves, net4,736 874 
Net interest income (expense) after provision for (release of) loan losses38,311 8,296 
Other income (loss)  
Real estate operating income23,199 26,354 
Net result from mortgage loan receivables held for sale(194)(949)
Realized gain (loss) on securities(307)(96)
Unrealized gain (loss) on securities117 17 
Realized gain (loss) on sale of real estate, net— 29,154 
Fee and other income1,831 7,194 
Net result from derivative transactions(2,242)3,135 
Earnings from investment in unconsolidated ventures217 434 
Gain on extinguishment of debt9,217 — 
Total other income (loss)31,838 65,243 
Costs and expenses  
Compensation and employee benefits22,084 29,864 
Operating expenses5,256 5,508 
Real estate operating expenses9,849 8,992 
Fee expense1,520 1,988 
Depreciation and amortization7,529 9,342 
Total costs and expenses46,238 55,694 
Income (loss) before taxes23,911 17,845 
Income tax expense (benefit)1,720 (1,309)
Net income (loss)22,191 19,154 
Net (income) loss attributable to noncontrolling interests in consolidated ventures217 (122)
Net income (loss) attributable to Class A common shareholders$22,408 $19,032 
Earnings per share:  
Basic$0.18 $0.15 
Diluted$0.18 $0.15 
Weighted average shares outstanding:  
Basic124,493,132 124,305,943 
Diluted124,656,102 125,478,001 

Refer to the accompanying notes to consolidated financial statements.
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Ladder Capital Corp
Consolidated Statements of Comprehensive Income
(Dollars in Thousands)
(Unaudited)

Three Months Ended March 31, Three Months Ended March 31,
20222021 20232022
Net income (loss)Net income (loss)$19,154 $432 Net income (loss)$22,191 $19,154 
Other comprehensive income (loss)Other comprehensive income (loss)  Other comprehensive income (loss)  
Unrealized gain (loss) on securities, net of tax:Unrealized gain (loss) on securities, net of tax:  Unrealized gain (loss) on securities, net of tax:  
Unrealized gain (loss) on real estate securities, available for saleUnrealized gain (loss) on real estate securities, available for sale(6,737)7,428 Unrealized gain (loss) on real estate securities, available for sale3,173 (6,737)
Reclassification adjustment for (gain) loss included in net income (loss)Reclassification adjustment for (gain) loss included in net income (loss)96 (579)Reclassification adjustment for (gain) loss included in net income (loss)312 96 
Total other comprehensive income (loss)Total other comprehensive income (loss)(6,641)6,849 Total other comprehensive income (loss)3,485 (6,641)
Comprehensive income (loss)Comprehensive income (loss)12,513 7,281 Comprehensive income (loss)25,676 12,513 
Comprehensive (income) loss attributable to noncontrolling interest in consolidated joint ventures(122)(240)
Comprehensive (income) loss attributable to noncontrolling interest in consolidated venturesComprehensive (income) loss attributable to noncontrolling interest in consolidated ventures217 (122)
Comprehensive income (loss) attributable to Class A common shareholdersComprehensive income (loss) attributable to Class A common shareholders$12,391 $7,041 Comprehensive income (loss) attributable to Class A common shareholders$25,893 $12,391 

Refer to the accompanying notes to consolidated financial statements.
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Ladder Capital Corp
Consolidated Statements of Changes in Equity
(Dollars and Shares in Thousands)
(Unaudited)
 Shareholders’ Equity    
 Class A Common Stock
Additional Paid-
in-Capital
Treasury StockRetained Earnings (Dividends in Excess of Earnings)
Accumulated
Other
Comprehensive
Income (Loss)
Noncontrolling  InterestsTotal Equity
SharesPar
Consolidated
Ventures
Balance, December 31, 2022126,502 $127 $1,826,833 $(95,600)$(177,005)$(21,009)$215 $1,533,561 
Distributions— — — — — — (511)(511)
Amortization of equity based compensation— — 9,124 — — — — 9,124 
Grants of restricted stock971 1 — (1)— — — — 
Purchase of treasury stock(250)— — (2,285)— — — (2,285)
Re-issuance of treasury stock446 — — — — — — — 
Shares acquired to satisfy minimum required federal and state tax withholding on vesting restricted stock and units(689)(1)— (7,852)— — — (7,853)
Forfeitures(32)— — — — — — — 
Dividends declared— — — — (29,158)— — (29,158)
Net income (loss)— — — — 22,408 — (217)22,191 
Other comprehensive income (loss)— — — — — 3,485 — 3,485 
Balance, March 31, 2023126,948 $127 $1,835,957 $(105,738)$(183,755)$(17,524)$(513)$1,528,554 

Refer to the accompanying notes to consolidated financial statements.




















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Ladder Capital Corp
Consolidated Statements of Changes in Equity
(Dollars and Shares in Thousands)
(Unaudited)
 Shareholders’ Equity    
 Class A Common Stock
Additional Paid-
in-Capital
Treasury StockRetained Earnings (Dividends in Excess of Earnings)
Accumulated
Other
Comprehensive
Income (Loss)
Noncontrolling  InterestsTotal Equity
SharesPar
Consolidated
Joint Ventures
Balance, December 31, 2021125,453 $126 $1,795,249 $(76,324)$(207,802)$(4,112)$6,482 $1,513,619 
Distributions— — — — — — (140)(140)
Amortization of equity based compensation— — 20,412 — — — — 20,412 
Grants of restricted stock2,248 2 — (3)— — — (1)
Purchase of treasury stock(55)— — (611)— — — (611)
Re-issuance of treasury stock596 — — — — — — — 
Shares acquired to satisfy minimum required federal and state tax withholding on vesting restricted stock and units(952)(1)— (11,320)— — — (11,321)
Forfeitures(66)— — — — — — — 
Dividends declared— — — — (25,314)— — (25,314)
Net income (loss)— — — — 19,032 — 122 19,154 
Other comprehensive income (loss)— — — — — (6,641)— (6,641)
Balance, March 31, 2022127,224 $127 $1,815,661 $(88,258)$(214,084)$(10,753)$6,464 $1,509,157 

Refer to the accompanying notes to consolidated financial statements.
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Ladder Capital Corp
Consolidated Statements of Changes in Equity
(Dollars and Shares in Thousands)
(Unaudited)

 Shareholders’ Equity    
 Class A Common Stock 
Additional Paid-
in-Capital
Treasury StockRetained Earnings (Dividends in Excess of Earnings)
Accumulated
Other
Comprehensive
Income (Loss)
Noncontrolling InterestsTotal Equity
SharesPar
Consolidated
Joint Ventures
Balance, December 31, 2020126,378 $127 $1,780,074 $(62,859)$(163,717)$(10,463)$5,263 $1,548,425 
Distributions— — — — — — (269)(269)
Amortization of equity based compensation— — 5,276 — — — — 5,276 
Purchase of treasury stock(20)— — (214)— — — (214)
Re-issuance of treasury stock748 — — (1)— — — (1)
Shares acquired to satisfy minimum required federal and state tax withholding on vesting restricted stock and units(437)— — (4,421)— — — (4,421)
Forfeitures(327)— — — — — — — 
Dividends declared— — — — (25,238)— — (25,238)
Net income (loss)— — — — 192 — 240 432 
Other comprehensive income (loss)— — — — — 6,849 — 6,849 
Balance, March 31, 2021126,342 $127 $1,785,350 $(67,495)$(188,763)$(3,614)$5,234 $1,530,839 

Refer to the accompanying notes to consolidated financial statements.


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Ladder Capital Corp
Ladder Capital Corp
ladrlogo3312017a27.jpg
(Exact name of registrant as specified in its charter)
Delaware80-0925494
(State or other jurisdiction of
incorporation or organization)		(IRS Employer
Identification No.)
320 Park Avenue,New York,NY10022
(Address of principal executive offices)(Zip Code)
(212) 715-3170
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading Symbol(s)Name of Each Exchange on Which Registered
Class A common stock, $0.001 par valueLADRNew York Stock Exchange


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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  ☒  No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes  ☒  No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
Large accelerated filer☒Accelerated filer☐
Non-accelerated filer☐Smaller reporting company☐
Emerging growth company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): 
Yes ☐  No ☒
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.
ClassOutstanding at April 21, 2023
Class A common stock, $0.001 par value126,948,532
Class B common stock, $0.001 par value—
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LADDER CAPITAL CORP
FORM 10-Q
March 31, 2023
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (this “Quarterly Report”) includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical fact contained in this Quarterly Report, including statements regarding our future results of operations and financial position, strategy and plans, and our expectations for future operations, are forward-looking statements. The words “anticipate,” “estimate,” “expect,” “project,” “plan,” “intend,” “believe,” “may,” “might,” “will,” “should,” “can have,” “likely,” “continue,” “design,” and other words and terms of similar expressions are intended to identify forward-looking statements.
We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, strategy, short-term and long-term business operations and objectives and financial needs. Although we believe that the expectations reflected in our forward-looking statements are reasonable, actual results could differ from those expressed in our forward-looking statements. Our future financial position and results of operations, as well as any forward-looking statements are subject to change and inherent risks and uncertainties. You should consider our forward-looking statements in light of a number of factors that may cause actual results to vary from our forward-looking statements including, but not limited to:
•risks discussed under the heading “Risk Factors” herein and in our Annual Report on Form 10-K for the year ended December 31, 2022 (“the Annual Report”), as well as our consolidated financial statements, related notes, and the other financial information appearing elsewhere in this Quarterly Report and our other filings with the United States Securities and Exchange Commission (the “SEC”);
•labor shortages, supply chain imbalances, continuing military actions between Russia and Ukraine, inflation, and the potential for a global economic recession;
•changes in general economic conditions and in the commercial finance and the real estate markets;
•changes to our business and investment strategy;
•our ability to obtain and maintain financing arrangements;
•the financing and advance rates for our assets, including the potential effects of the transition to Secured Overnight Financing Rate (“SOFR”) rates from London Interbank Offered Rate (“LIBOR”);
•our actual and expected leverage and liquidity;
•the adequacy of collateral securing our loan portfolio and a decline in the fair value of our assets;
•interest rate mismatches between our assets and our borrowings used to fund such investments;
•changes in interest rates affecting the market value of our assets and the related impacts on our borrowers;
•changes in prepayment rates on our mortgages and the loans underlying our commercial mortgage-backed and other asset-backed securities;
•the effects of hedging instruments and the degree to which our hedging strategies may or may not protect us from interest rate and credit risk volatility;
•the increased rate of default or decreased recovery rates on our assets;
•the adequacy of our policies, procedures and systems for managing risk effectively;
•a potential downgrade in the credit ratings assigned to Ladder or our investments;
•our compliance with, and the impact of, and changes in laws, governmental regulations, tax laws and rates, accounting guidance and similar matters;
•our ability to maintain our qualification as a real estate investment trust (“REIT”) for U.S. federal income tax purposes and our ability and the ability of our subsidiaries to operate in compliance with REIT requirements;
•our ability and the ability of our subsidiaries to maintain our and their exemptions from registration under the Investment Company Act of 1940, as amended (the “Investment Company Act”);
•the effects of climate change or the potential liability relating to environmental matters that impact the value of properties we may acquire or the properties underlying our investments;
•the inability of insurance covering real estate underlying our loans and investments to cover all losses;
•the availability of investment opportunities in mortgage-related and real estate-related instruments and other securities;
•fraud by potential borrowers;
•our ability to attract and retain qualified employees;
•the impact of any tax legislation or IRS guidance;
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•volatility in the equity capital markets and the impact on our Class A common stock;
•the degree and nature of our competition; and
•the market trends in our industry, interest rates, real estate values and the debt securities markets.
You should not rely upon forward-looking statements as predictions of future events. In addition, neither we nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. The forward-looking statements contained in this Quarterly Report are made as of the date hereof, and the Company assumes no obligation to update or supplement any forward-looking statements.

Part I - Financial Information

Item 1. Financial Statements (Unaudited)

The consolidated financial statements of Ladder Capital Corp and the notes related to the foregoing consolidated financial statements are included in this Item.
Index to Consolidated Financial Statements (Unaudited)
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Ladder Capital Corp
Consolidated Balance Sheets
(Dollars in Thousands)
 March 31, 2023(1)December 31, 2022(1)
(Unaudited)
Assets  
Cash and cash equivalents$626,139 $609,078 
Restricted cash25,158 50,524 
Mortgage loan receivables held for investment, net, at amortized cost:
Mortgage loans receivable3,794,075 3,885,746 
Allowance for credit losses(25,499)(20,755)
Mortgage loan receivables held for sale27,197 27,391 
Securities520,008 587,519 
Real estate and related lease intangibles, net693,266 700,136 
Investments in and advances to unconsolidated ventures6,336 6,219 
Derivative instruments1,421 2,038 
Accrued interest receivable25,794 24,938 
Other assets166,631 78,339 
Total assets$5,860,526 $5,951,173 
Liabilities and Equity  
Liabilities  
Debt obligations, net$4,082,428 $4,245,697 
Dividends payable30,802 32,000 
Accrued expenses50,937 68,227 
Other liabilities167,805 71,688 
Total liabilities4,331,972 4,417,612 
Commitments and contingencies (Note 17)— — 
Equity  
Class A common stock, par value $0.001 per share, 600,000,000 shares authorized; 128,027,478 and 128,027,478 shares issued and 126,948,532 and 126,502,049 shares outstanding127 127 
Additional paid-in capital1,835,957 1,826,833 
Treasury stock, 1,078,946 and 1,525,429 shares, at cost(105,738)(95,600)
Retained earnings (dividends in excess of earnings)(183,755)(177,005)
Accumulated other comprehensive income (loss)(17,524)(21,009)
Total shareholders’ equity1,529,067 1,533,346 
Noncontrolling interests in consolidated ventures(513)215 
Total equity1,528,554 1,533,561 
Total liabilities and equity$5,860,526 $5,951,173 
(1)Includes amounts relating to consolidated variable interest entities. Refer to Note 2 and Note 9.

Refer to the accompanying notes to consolidated financial statements.
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Ladder Capital Corp
Consolidated Statements of Income
(Dollars in Thousands, Except Per Share Data)
(Unaudited)

 Three Months Ended March 31,
 20232022
Net interest income  
Interest income$103,796 $56,205 
Interest expense60,749 47,035 
Net interest income (expense)43,047 9,170 
Provision for (release of) loan loss reserves, net4,736 874 
Net interest income (expense) after provision for (release of) loan losses38,311 8,296 
Other income (loss)  
Real estate operating income23,199 26,354 
Net result from mortgage loan receivables held for sale(194)(949)
Realized gain (loss) on securities(307)(96)
Unrealized gain (loss) on securities117 17 
Realized gain (loss) on sale of real estate, net— 29,154 
Fee and other income1,831 7,194 
Net result from derivative transactions(2,242)3,135 
Earnings from investment in unconsolidated ventures217 434 
Gain on extinguishment of debt9,217 — 
Total other income (loss)31,838 65,243 
Costs and expenses  
Compensation and employee benefits22,084 29,864 
Operating expenses5,256 5,508 
Real estate operating expenses9,849 8,992 
Fee expense1,520 1,988 
Depreciation and amortization7,529 9,342 
Total costs and expenses46,238 55,694 
Income (loss) before taxes23,911 17,845 
Income tax expense (benefit)1,720 (1,309)
Net income (loss)22,191 19,154 
Net (income) loss attributable to noncontrolling interests in consolidated ventures217 (122)
Net income (loss) attributable to Class A common shareholders$22,408 $19,032 
Earnings per share:  
Basic$0.18 $0.15 
Diluted$0.18 $0.15 
Weighted average shares outstanding:  
Basic124,493,132 124,305,943 
Diluted124,656,102 125,478,001 

Refer to the accompanying notes to consolidated financial statements.
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Ladder Capital Corp
Consolidated Statements of Comprehensive Income
(Dollars in Thousands)
(Unaudited)
 Three Months Ended March 31,
 20222021
Cash flows from operating activities:  
Net income (loss)$19,154 $432 
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: 
Depreciation and amortization9,342 9,536 
Unrealized (gain) loss on derivative instruments162 (2)
Unrealized (gain) loss on equity securities(14)— 
Unrealized (gain) loss on Agency interest-only securities(3)20 
Provision for (release of) loan loss reserves874 (4,251)
Amortization of equity based compensation20,412 5,276 
Amortization of deferred financing costs included in interest expense5,857 4,892 
Amortization of premium/discount on mortgage loan financing included in interest expense(330)(273)
Amortization of above- and below-market lease intangibles(444)(478)
(Accretion)/amortization of discount, premium and other fees on loans(5,162)(3,408)
(Accretion)/amortization of discount, premium and other fees on securities(37)35 
Realized (gain) loss on sale of mortgage loan receivables held for sale949 — 
Realized (gain) loss on disposition of loan via foreclosure— 26 
Realized (gain) loss on securities96 (579)
Realized (gain) loss on sale of real estate, net(29,154)— 
       (Earnings) loss from investments in unconsolidated joint ventures in excess of distributions received191 (436)
Insurance proceeds used for remediation work due to property damage(36)— 
Origination of mortgage loan receivables held for sale(54,850)(41,000)
Repayment of mortgage loan receivables held for sale— 36 
Change in deferred tax asset (liability)(402)1,219 
Accrued interest receivable(805)2,580 
Other assets2,332 (1,565)
Accrued expenses and other liabilities1,833 (15,650)
Net cash provided by (used in) operating activities(30,035)(43,590)
Cash flows from investing activities:  
Origination of mortgage loan receivables held for investment(648,507)(116,555)
Repayment of mortgage loan receivables held for investment358,198 394,446 
Proceeds from sale of mortgage loan receivables held for investment— 46,557 
Purchases of real estate securities(26,033)(40,016)
Repayment of real estate securities57,756 10,540 
Basis recovery of interest-only securities1,383 2,002 
Proceeds from sales of real estate securities4,261 329,063 
Capital improvements of real estate(751)(1,269)
Proceeds from sale of real estate79,473 43,750 
Capital distribution from investment in unconsolidated joint ventures2,284 2,181 
Proceeds from sale of FHLB stock— 18,040 
Net cash provided by (used in) investing activities(171,936)688,739 
Cash flows from financing activities:  
Deferred financing costs paid(1,510)(621)
Proceeds from borrowings under debt obligations443,866 1,631,557 

 Three Months Ended March 31,
 20232022
Net income (loss)$22,191 $19,154 
Other comprehensive income (loss)  
Unrealized gain (loss) on securities, net of tax:  
Unrealized gain (loss) on real estate securities, available for sale3,173 (6,737)
Reclassification adjustment for (gain) loss included in net income (loss)312 96 
Total other comprehensive income (loss)3,485 (6,641)
Comprehensive income (loss)25,676 12,513 
Comprehensive (income) loss attributable to noncontrolling interest in consolidated ventures217 (122)
Comprehensive income (loss) attributable to Class A common shareholders$25,893 $12,391 

Refer to the accompanying notes to consolidated financial statements.
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 Three Months Ended March 31,
 20222021
Repayment of borrowings under debt obligations(328,495)(2,077,161)
Cash dividends paid to Class A common shareholders(26,142)(26,245)
Capital distributed to noncontrolling interests in consolidated joint ventures(140)(269)
Reissuance of treasury stock(1)(1)
Payment of liability assumed in exchange for shares for the minimum withholding taxes on vesting restricted stock(11,321)(4,421)
Purchase of treasury stock(611)(214)
Issuance of common stock3 1 
Net cash provided by (used in) financing activities75,649 (477,374)
Net increase (decrease) in cash, cash equivalents and restricted cash(126,322)167,775 
Cash, cash equivalents and restricted cash at beginning of period621,546 1,284,284 
Cash, cash equivalents and restricted cash at end of period$495,224 $1,452,059 
Supplemental information:  
Cash paid for interest, net of amounts capitalized$36,146 $54,362 
Cash paid (received) for income taxes7 863 
Non-cash investing and financing activities:  
Securities and derivatives purchased, not settled3,776 — 
Securities and derivatives sold, not settled54 — 
Repayment in transit of mortgage loans receivable held for investment (other assets)18,373 50,832 
Settlement of mortgage loan receivable held for investment by real estate, net— (43,129)
Real estate acquired in settlement of mortgage loan receivable held for investment, net— 43,750 
Real estate acquired in former unconsolidated joint venture agreement15,436 — 
Transfer of real estate, net into real estate held for sale(55,412)— 
Dividends declared, not paid26,763 26,530 
Ladder Capital Corp

Consolidated Statements of Changes in Equity
The following table provides a reconciliation of cash, cash equivalents(Dollars and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shownShares in the consolidated statement of cash flows ($ in thousands):Thousands)
March 31, 2022March 31, 2021
Cash and cash equivalents$431,762 $1,305,686 
Restricted cash63,462 146,373 
Total cash, cash equivalents and restricted cash shown in the consolidated statement of cash flows$495,224 $1,452,059 
(Unaudited)
 Shareholders’ Equity    
 Class A Common Stock
Additional Paid-
in-Capital
Treasury StockRetained Earnings (Dividends in Excess of Earnings)
Accumulated
Other
Comprehensive
Income (Loss)
Noncontrolling  InterestsTotal Equity
SharesPar
Consolidated
Ventures
Balance, December 31, 2022126,502 $127 $1,826,833 $(95,600)$(177,005)$(21,009)$215 $1,533,561 
Distributions— — — — — — (511)(511)
Amortization of equity based compensation— — 9,124 — — — — 9,124 
Grants of restricted stock971 1 — (1)— — — — 
Purchase of treasury stock(250)— — (2,285)— — — (2,285)
Re-issuance of treasury stock446 — — — — — — — 
Shares acquired to satisfy minimum required federal and state tax withholding on vesting restricted stock and units(689)(1)— (7,852)— — — (7,853)
Forfeitures(32)— — — — — — — 
Dividends declared— — — — (29,158)— — (29,158)
Net income (loss)— — — — 22,408 — (217)22,191 
Other comprehensive income (loss)— — — — — 3,485 — 3,485 
Balance, March 31, 2023126,948 $127 $1,835,957 $(105,738)$(183,755)$(17,524)$(513)$1,528,554 

Refer to the accompanying notes to consolidated financial statements.




















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Ladder Capital Corp
Consolidated Statements of Changes in Equity
(Dollars and Shares in Thousands)
(Unaudited)
 Shareholders’ Equity    
 Class A Common Stock
Additional Paid-
in-Capital
Treasury StockRetained Earnings (Dividends in Excess of Earnings)
Accumulated
Other
Comprehensive
Income (Loss)
Noncontrolling  InterestsTotal Equity
SharesPar
Consolidated
Joint Ventures
Balance, December 31, 2021125,453 $126 $1,795,249 $(76,324)$(207,802)$(4,112)$6,482 $1,513,619 
Distributions— — — — — — (140)(140)
Amortization of equity based compensation— — 20,412 — — — — 20,412 
Grants of restricted stock2,248 2 — (3)— — — (1)
Purchase of treasury stock(55)— — (611)— — — (611)
Re-issuance of treasury stock596 — — — — — — — 
Shares acquired to satisfy minimum required federal and state tax withholding on vesting restricted stock and units(952)(1)— (11,320)— — — (11,321)
Forfeitures(66)— — — — — — — 
Dividends declared— — — — (25,314)— — (25,314)
Net income (loss)— — — — 19,032 — 122 19,154 
Other comprehensive income (loss)— — — — — (6,641)— (6,641)
Balance, March 31, 2022127,224 $127 $1,815,661 $(88,258)$(214,084)$(10,753)$6,464 $1,509,157 

Refer to the accompanying notes to consolidated financial statements.
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Ladder Capital Corp
Ladder Capital Corp
ladrlogo3312017a27.jpg
(Exact name of registrant as specified in its charter)
Delaware80-0925494
(State or other jurisdiction of
incorporation or organization)		(IRS Employer
Identification No.)
320 Park Avenue,New York,NY10022
(Address of principal executive offices)(Zip Code)
(212) 715-3170
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading Symbol(s)Name of Each Exchange on Which Registered
Class A common stock, $0.001 par valueLADRNew York Stock Exchange


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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  ☒  No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes  ☒  No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
Large accelerated filer☒Accelerated filer☐
Non-accelerated filer☐Smaller reporting company☐
Emerging growth company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): 
Yes ☐  No ☒
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.
ClassOutstanding at April 21, 2023
Class A common stock, $0.001 par value126,948,532
Class B common stock, $0.001 par value—
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LADDER CAPITAL CORP
FORM 10-Q
March 31, 2023
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (this “Quarterly Report”) includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical fact contained in this Quarterly Report, including statements regarding our future results of operations and financial position, strategy and plans, and our expectations for future operations, are forward-looking statements. The words “anticipate,” “estimate,” “expect,” “project,” “plan,” “intend,” “believe,” “may,” “might,” “will,” “should,” “can have,” “likely,” “continue,” “design,” and other words and terms of similar expressions are intended to identify forward-looking statements.
We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, strategy, short-term and long-term business operations and objectives and financial needs. Although we believe that the expectations reflected in our forward-looking statements are reasonable, actual results could differ from those expressed in our forward-looking statements. Our future financial position and results of operations, as well as any forward-looking statements are subject to change and inherent risks and uncertainties. You should consider our forward-looking statements in light of a number of factors that may cause actual results to vary from our forward-looking statements including, but not limited to:
•risks discussed under the heading “Risk Factors” herein and in our Annual Report on Form 10-K for the year ended December 31, 2022 (“the Annual Report”), as well as our consolidated financial statements, related notes, and the other financial information appearing elsewhere in this Quarterly Report and our other filings with the United States Securities and Exchange Commission (the “SEC”);
•labor shortages, supply chain imbalances, continuing military actions between Russia and Ukraine, inflation, and the potential for a global economic recession;
•changes in general economic conditions and in the commercial finance and the real estate markets;
•changes to our business and investment strategy;
•our ability to obtain and maintain financing arrangements;
•the financing and advance rates for our assets, including the potential effects of the transition to Secured Overnight Financing Rate (“SOFR”) rates from London Interbank Offered Rate (“LIBOR”);
•our actual and expected leverage and liquidity;
•the adequacy of collateral securing our loan portfolio and a decline in the fair value of our assets;
•interest rate mismatches between our assets and our borrowings used to fund such investments;
•changes in interest rates affecting the market value of our assets and the related impacts on our borrowers;
•changes in prepayment rates on our mortgages and the loans underlying our commercial mortgage-backed and other asset-backed securities;
•the effects of hedging instruments and the degree to which our hedging strategies may or may not protect us from interest rate and credit risk volatility;
•the increased rate of default or decreased recovery rates on our assets;
•the adequacy of our policies, procedures and systems for managing risk effectively;
•a potential downgrade in the credit ratings assigned to Ladder or our investments;
•our compliance with, and the impact of, and changes in laws, governmental regulations, tax laws and rates, accounting guidance and similar matters;
•our ability to maintain our qualification as a real estate investment trust (“REIT”) for U.S. federal income tax purposes and our ability and the ability of our subsidiaries to operate in compliance with REIT requirements;
•our ability and the ability of our subsidiaries to maintain our and their exemptions from registration under the Investment Company Act of 1940, as amended (the “Investment Company Act”);
•the effects of climate change or the potential liability relating to environmental matters that impact the value of properties we may acquire or the properties underlying our investments;
•the inability of insurance covering real estate underlying our loans and investments to cover all losses;
•the availability of investment opportunities in mortgage-related and real estate-related instruments and other securities;
•fraud by potential borrowers;
•our ability to attract and retain qualified employees;
•the impact of any tax legislation or IRS guidance;
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•volatility in the equity capital markets and the impact on our Class A common stock;
•the degree and nature of our competition; and
•the market trends in our industry, interest rates, real estate values and the debt securities markets.
You should not rely upon forward-looking statements as predictions of future events. In addition, neither we nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. The forward-looking statements contained in this Quarterly Report are made as of the date hereof, and the Company assumes no obligation to update or supplement any forward-looking statements.

Part I - Financial Information

Item 1. Financial Statements (Unaudited)

The consolidated financial statements of Ladder Capital Corp and the notes related to the foregoing consolidated financial statements are included in this Item.
Index to Consolidated Financial Statements (Unaudited)
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Ladder Capital Corp
Consolidated Balance Sheets
(Dollars in Thousands)
 March 31, 2023(1)December 31, 2022(1)
(Unaudited)
Assets  
Cash and cash equivalents$626,139 $609,078 
Restricted cash25,158 50,524 
Mortgage loan receivables held for investment, net, at amortized cost:
Mortgage loans receivable3,794,075 3,885,746 
Allowance for credit losses(25,499)(20,755)
Mortgage loan receivables held for sale27,197 27,391 
Securities520,008 587,519 
Real estate and related lease intangibles, net693,266 700,136 
Investments in and advances to unconsolidated ventures6,336 6,219 
Derivative instruments1,421 2,038 
Accrued interest receivable25,794 24,938 
Other assets166,631 78,339 
Total assets$5,860,526 $5,951,173 
Liabilities and Equity  
Liabilities  
Debt obligations, net$4,082,428 $4,245,697 
Dividends payable30,802 32,000 
Accrued expenses50,937 68,227 
Other liabilities167,805 71,688 
Total liabilities4,331,972 4,417,612 
Commitments and contingencies (Note 17)— — 
Equity  
Class A common stock, par value $0.001 per share, 600,000,000 shares authorized; 128,027,478 and 128,027,478 shares issued and 126,948,532 and 126,502,049 shares outstanding127 127 
Additional paid-in capital1,835,957 1,826,833 
Treasury stock, 1,078,946 and 1,525,429 shares, at cost(105,738)(95,600)
Retained earnings (dividends in excess of earnings)(183,755)(177,005)
Accumulated other comprehensive income (loss)(17,524)(21,009)
Total shareholders’ equity1,529,067 1,533,346 
Noncontrolling interests in consolidated ventures(513)215 
Total equity1,528,554 1,533,561 
Total liabilities and equity$5,860,526 $5,951,173 
(1)Includes amounts relating to consolidated variable interest entities. Refer to Note 2 and Note 9.

Refer to the accompanying notes to consolidated financial statements.
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Ladder Capital Corp
Consolidated Statements of Income
(Dollars in Thousands, Except Per Share Data)
(Unaudited)

 Three Months Ended March 31,
 20232022
Net interest income  
Interest income$103,796 $56,205 
Interest expense60,749 47,035 
Net interest income (expense)43,047 9,170 
Provision for (release of) loan loss reserves, net4,736 874 
Net interest income (expense) after provision for (release of) loan losses38,311 8,296 
Other income (loss)  
Real estate operating income23,199 26,354 
Net result from mortgage loan receivables held for sale(194)(949)
Realized gain (loss) on securities(307)(96)
Unrealized gain (loss) on securities117 17 
Realized gain (loss) on sale of real estate, net— 29,154 
Fee and other income1,831 7,194 
Net result from derivative transactions(2,242)3,135 
Earnings from investment in unconsolidated ventures217 434 
Gain on extinguishment of debt9,217 — 
Total other income (loss)31,838 65,243 
Costs and expenses  
Compensation and employee benefits22,084 29,864 
Operating expenses5,256 5,508 
Real estate operating expenses9,849 8,992 
Fee expense1,520 1,988 
Depreciation and amortization7,529 9,342 
Total costs and expenses46,238 55,694 
Income (loss) before taxes23,911 17,845 
Income tax expense (benefit)1,720 (1,309)
Net income (loss)22,191 19,154 
Net (income) loss attributable to noncontrolling interests in consolidated ventures217 (122)
Net income (loss) attributable to Class A common shareholders$22,408 $19,032 
Earnings per share:  
Basic$0.18 $0.15 
Diluted$0.18 $0.15 
Weighted average shares outstanding:  
Basic124,493,132 124,305,943 
Diluted124,656,102 125,478,001 

Refer to the accompanying notes to consolidated financial statements.
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Ladder Capital Corp
Consolidated Statements of Comprehensive Income
(Dollars in Thousands)
(Unaudited)

 Three Months Ended March 31,
 20232022
Net income (loss)$22,191 $19,154 
Other comprehensive income (loss)  
Unrealized gain (loss) on securities, net of tax:  
Unrealized gain (loss) on real estate securities, available for sale3,173 (6,737)
Reclassification adjustment for (gain) loss included in net income (loss)312 96 
Total other comprehensive income (loss)3,485 (6,641)
Comprehensive income (loss)25,676 12,513 
Comprehensive (income) loss attributable to noncontrolling interest in consolidated ventures217 (122)
Comprehensive income (loss) attributable to Class A common shareholders$25,893 $12,391 

Refer to the accompanying notes to consolidated financial statements.
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Ladder Capital Corp
Consolidated Statements of Changes in Equity
(Dollars and Shares in Thousands)
(Unaudited)
 Shareholders’ Equity    
 Class A Common Stock
Additional Paid-
in-Capital
Treasury StockRetained Earnings (Dividends in Excess of Earnings)
Accumulated
Other
Comprehensive
Income (Loss)
Noncontrolling  InterestsTotal Equity
SharesPar
Consolidated
Ventures
Balance, December 31, 2022126,502 $127 $1,826,833 $(95,600)$(177,005)$(21,009)$215 $1,533,561 
Distributions— — — — — — (511)(511)
Amortization of equity based compensation— — 9,124 — — — — 9,124 
Grants of restricted stock971 1 — (1)— — — — 
Purchase of treasury stock(250)— — (2,285)— — — (2,285)
Re-issuance of treasury stock446 — — — — — — — 
Shares acquired to satisfy minimum required federal and state tax withholding on vesting restricted stock and units(689)(1)— (7,852)— — — (7,853)
Forfeitures(32)— — — — — — — 
Dividends declared— — — — (29,158)— — (29,158)
Net income (loss)— — — — 22,408 — (217)22,191 
Other comprehensive income (loss)— — — — — 3,485 — 3,485 
Balance, March 31, 2023126,948 $127 $1,835,957 $(105,738)$(183,755)$(17,524)$(513)$1,528,554 

Refer to the accompanying notes to consolidated financial statements.




















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Ladder Capital Corp
Consolidated Statements of Changes in Equity
(Dollars and Shares in Thousands)
(Unaudited)
 Shareholders’ Equity    
 Class A Common Stock
Additional Paid-
in-Capital
Treasury StockRetained Earnings (Dividends in Excess of Earnings)
Accumulated
Other
Comprehensive
Income (Loss)
Noncontrolling  InterestsTotal Equity
SharesPar
Consolidated
Joint Ventures
Balance, December 31, 2021125,453 $126 $1,795,249 $(76,324)$(207,802)$(4,112)$6,482 $1,513,619 
Distributions— — — — — — (140)(140)
Amortization of equity based compensation— — 20,412 — — — — 20,412 
Grants of restricted stock2,248 2 — (3)— — — (1)
Purchase of treasury stock(55)— — (611)— — — (611)
Re-issuance of treasury stock596 — — — — — — — 
Shares acquired to satisfy minimum required federal and state tax withholding on vesting restricted stock and units(952)(1)— (11,320)— — — (11,321)
Forfeitures(66)— — — — — — — 
Dividends declared— — — — (25,314)— — (25,314)
Net income (loss)— — — — 19,032 — 122 19,154 
Other comprehensive income (loss)— — — — — (6,641)— (6,641)
Balance, March 31, 2022127,224 $127 $1,815,661 $(88,258)$(214,084)$(10,753)$6,464 $1,509,157 

Refer to the accompanying notes to consolidated financial statements.
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Ladder Capital Corp
Consolidated Statements of Cash Flows
(Dollars in Thousands)
(Unaudited)
 Three Months Ended March 31,
 20232022
Cash flows from operating activities:  
Net income (loss)$22,191 $19,154 
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: 
(Gain) loss on extinguishment of debt(9,217)— 
Depreciation and amortization7,529 9,342 
Non-cash operating lease expense538 — 
Unrealized (gain) loss on derivative instruments373 162 
Unrealized (gain) loss on equity securities6 (14)
Unrealized (gain) loss on Agency interest-only securities(123)(3)
Provision for (release of) loan loss reserves4,736 874 
Amortization of equity based compensation9,124 20,412 
Amortization of deferred financing costs included in interest expense3,580 5,857 
Amortization of premium/discount on mortgage loan financing included in interest expense(150)(330)
Amortization of above- and below-market lease intangibles(454)(444)
(Accretion)/amortization of discount, premium and other fees on loans(6,985)(5,162)
(Accretion)/amortization of discount, premium and other fees on securities(501)(37)
Net result from mortgage loan receivables held for sale194 949 
Realized (gain) loss on securities307 96 
Realized (gain) loss on sale of real estate, net— (29,154)
Realized gain on sale of derivative instruments244 — 
       (Earnings) loss from investments in unconsolidated ventures in excess of distributions received(117)191 
Insurance proceeds for remediation work due to property damage473 — 
Insurance proceeds used for remediation work due to property damage— (36)
Origination of mortgage loan receivables held for sale— (54,850)
Change in deferred tax asset (liability)827 (402)
Changes in operating assets and liabilities:  
Accrued interest receivable(856)(805)
Other assets1,902 2,332 
Accrued expenses and other liabilities77,789 1,833 
Net cash provided by (used in) operating activities111,410 (30,035)
Cash flows from investing activities:  
Origination of mortgage loan receivables held for investment(32,616)(648,507)
Repayment of mortgage loan receivables held for investment150,186 358,198 
Purchases of securities(3,513)(26,033)
Repayment of securities60,214 57,756 
Basis recovery of interest-only securities1,024 1,383 
Proceeds from sales of securities13,595 4,261 
Capital improvements of real estate(626)(751)
Proceeds from sale of real estate— 79,473 
Capital distribution from investment in unconsolidated ventures— 2,284 
Net cash provided by (used in) investing activities188,264 (171,936)
Cash flows from financing activities:  
Deferred financing costs paid(817)(1,510)
Proceeds from borrowings under debt obligations601,338 443,866 
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 Three Months Ended March 31,
 20232022
Repayment and repurchase of borrowings under debt obligations(757,779)(328,495)
Cash dividends paid to Class A common shareholders(30,356)(26,142)
Capital distributed to noncontrolling interests in consolidated ventures(511)(140)
Reissuance of treasury stock— (1)
Payment of liability assumed in exchange for shares for the minimum withholding taxes on vesting restricted stock(7,852)(11,321)
Purchase of treasury stock(2,285)(611)
Issuance of common stock— 3 
Net cash provided by (used in) financing activities(198,262)75,649 
Net increase (decrease) in cash, cash equivalents and restricted cash101,412 (126,322)
Cash, cash equivalents and restricted cash at beginning of period659,602 621,546 
Cash, cash equivalents and restricted cash at end of period$761,014 $495,224 
Non-cash investing and financing activities:  
Securities and derivatives purchased, not settled— 3,776 
Securities and derivatives sold, not settled12 54 
Repayment in transit of mortgage loans receivable held for investment (other assets)— 18,373 
Real estate acquired in former unconsolidated venture agreement— 15,436 
Transfer of real estate, net into real estate held for sale— (55,412)
Dividends declared, not paid30,802 26,763 

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statement of cash flows ($ in thousands):
March 31, 2023March 31, 2022
Cash and cash equivalents$626,139 $431,762 
Restricted cash25,158 63,462 
Short-term unsettled U.S. treasury securities classified in other assets on the consolidated balance sheet109,717 — 
Total cash, cash equivalents and restricted cash shown in the consolidated statement of cash flows$761,014 $495,224 

Refer to the accompanying notes to consolidated financial statements.


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Ladder Capital Corp
Notes to Consolidated Financial Statements
(Unaudited)
 
1. ORGANIZATION AND OPERATIONS
 
Ladder Capital Corp (the(“Ladder,” “Ladder Capital,” and the “Company”) is an internally-managed real estate investment trust (“REIT”) that is a leader in commercial real estate finance. The Company originates and invests in a diverse portfolio of commercial real estate and real estate-related assets, focusing on senior secured assets. The Company’s investment activities include: (i) the Company’s 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; and (iii) owning and operating commercial real estate, including net leased commercial properties.estate. Ladder Capital Corp, as the general partner of Ladder Capital Finance Holdings LLLP (“LCFH” or the “Operating Partnership”), operates the Ladder Capital business through LCFH and its subsidiaries. As of March 31, 2022,2023, Ladder Capital Corp has a 100.0%100% economic interest in LCFH and controls the management of LCFH as a result of its ability to appoint its board members. Accordingly, Ladder Capital Corp consolidates the financial results of LCFH and its subsidiaries. In addition, Ladder Capital Corp, through certain subsidiaries which are treated as taxable REIT subsidiaries (each a “TRS”), is indirectly subject to U.S. federal, state and local income taxes. Other than such indirect U.S. federal, state and local income taxes, there are no material differences between Ladder Capital Corp’s consolidated financial statements and LCFH’s consolidated financial statements.

Ladder Capital Corp was formed as a Delaware corporation on May 21, 2013. The Company conducted its initial public offering (“IPO”) which closed on February 11, 2014. The Company used the net proceeds from the IPO to purchase newly issuednewly-issued limited partnership units (“LP Units”) from LCFH. In connection with the IPO, Ladder Capital Corp also became a holding corporation and the general partner of, and obtained a controlling interest in, LCFH. Ladder Capital Corp’s only business is to act as the general partner of LCFH, and, as such, Ladder Capital Corp indirectly operates and controls all of the business and affairs of LCFH and its subsidiaries. The IPO transactions described herein are referred to as the “IPO Transactions.”

The Company continues to actively manage the liquidity and operations of the Company in light of the current market conditions including the impact of the COVID-19 pandemic in the United States. 


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2. SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting and Principles of Consolidation
 
The accompanying consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). In the opinion of management, the unaudited financial information for the interim periods presented in this report reflects all normal and recurring adjustments necessary for a fair statement of results of operations, financial position and cash flows. The interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2021,2022, which are included in the Annual Report, as certain disclosures that would substantially duplicate those contained in the audited consolidated financial statements have not been included in this interim report. Operating results for interim periods are not necessarily indicative of operating results for an entire fiscal year.

The consolidated financial statements include the Company’s accounts and those of its subsidiaries that are majority-owned and/or controlled by the Company and variable interest entities for which the Company has determined itself to be the primary beneficiary, if any. All significant intercompany transactions and balances have been eliminated.
 
Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 810 — Consolidation (“ASC 810”), provides guidance on the identification of entities for which control is achieved through means other than voting rights (“variable interest entities” or “VIEs”) and the determination of which business enterprise, if any, should consolidate the VIEs. Generally, the consideration of whether an entity is a VIE applies when either: (1) the equity investors (if any) lack one or more of the essential characteristics of a controlling financial interest; (2) the equity investment at risk is insufficient to finance that entity’s activities without additional subordinated financial support; or (3) the equity investors have voting rights that are not proportionate to their economic interests and the activities of the entity involve or are conducted on behalf of an investor with a disproportionately small voting interest. The Company consolidates VIEs in which it is considered to be the primary beneficiary. The primary beneficiary is the entity that has both of the following characteristics: (1) the power to direct the activities that, when taken together, most significantly impact the VIE’s performance; and (2) the obligation to absorb losses and right to receive the returns from the VIE that would be significant to the VIE. Refer to Note 10,9, Consolidated Variable Interest Entities, for further information on the Company’s consolidated variable interest entities. Investments in advances to unconsolidated ventures represents the Company’s investment in Grace Lake LLC, a VIE. The Company determined that it was not the primary beneficiary of this VIE because the Company has a passive investment and no control of this entity and therefore does not have controlling financial interests in this VIE. The Company’s maximum exposure to loss is limited to its investment in the VIE. The Company has not provided financial support to this unconsolidated VIE that it was not previously contractually required to provide.

Provision for Loan Losses

The Company uses a current expected credit loss model (“CECL”) for estimating the provision for loan losses on its loan portfolio. The CECL model requires the consideration of possible credit losses over the life of an instrument and includes a portfolio-based component and an asset-specific component. In compliance with the CECL reporting requirements, the Company supplemented its existing credit monitoring and management processes with additional processes to support the calculation of the CECL reserves. As part of that effort, the Company engages a third-party service provider to provide market data and a credit loss model. The credit loss model is a forward-looking, econometric, commercial real estate (“CRE”) loss forecasting tool. It is comprised of a probability of default (“PD”) model and a loss given default (“LGD”) model that, layered together with user’sthe Company’s loan-level data, fair value of collateral, net operating income of collateral, selected forward-looking macroeconomic variables, and pool-level mean loss rates, produces life of loan expected losses (“EL”) at the loan and portfolio level. Where management has determined that the credit loss model does not fully capture certain external factors, including portfolio trends or loan-specific factors, a qualitative adjustment to the reserve, is recorded. In addition, interest receivable on loans is not included in the Company’s CECL calculations as the Company performs timely write off of aged accounts receivable. The Company has made a policy election to write off aged receivables through interest income as opposed to through the CECL provision on its statements of income.

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The asset-specific reserve component relates to reserves for losses on individually impaired loans. The Company evaluates each loan for impairment at least quarterly. Impairment occurs when it is deemed probable that the Company will not be able to collect all amounts due according to the contractual terms of the loan. If the loan is considered to be impaired, an allowance is recorded to reduce the carrying value of the loan to the present value of the expected future cash flows discounted at the loan’s effective rate or the fair value of the collateral, less the estimated costs to sell, if recovery of the Company’s investment is expected solely from the collateral. The Company may use the direct capitalization rate valuation methodology, the discounted cash flow methodology, or the sales comparison approach to estimate the fair value of the collateral for such loans and in certain cases will obtain external appraisals and take into account potential sale bids. Determining fair value of the collateral may take into account a number of assumptions including, but not limited to, cash flow projections, market capitalization rates, discount rates and data regarding recent comparable sales of similar properties. Such assumptions are generally based on current market conditions and are subject to economic and market uncertainties.

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The Company’s loans are typically collateralized by real estate directly or indirectly. As a result, the Company regularly evaluates the extent and impact of any credit deterioration associated with the performance and/or value of the underlying collateral property as well as the financial and operating capability of the borrower/sponsor on a loan-by-loan basis. Specifically, a property’s operating results and any cash reserves are analyzed and used to assess;assess: (i) whether cash flow from operations is sufficient to cover the debt service requirements currently and into the future; (ii) the ability of the borrower to refinance the loan at maturity; and/or (iii) the property’s liquidation value. The Company also evaluates the financial wherewithal of any loan guarantors as well as the borrower’s competency in managing and operating the properties. In addition, the Company considers the overall economic environment, real estate sector, and geographic submarket in which the collateral property is located. Such impairment analyses are completed and reviewed by asset management and underwriting personnel, who utilize various data sources, including;including: (i) periodic financial data such as property occupancy, tenant profile, rental rates, operating expenses, the borrowers’ business plan, and capitalization and discount rates; (ii) site inspections; and (iii) current credit spreads and other market data and ultimately presented to management for approval.

A loan is also considered impaired if its terms are modified inWhen a troubled debt restructuring (“TDR”). A TDR occurs when a concession is granted and the debtor is experiencing financial difficulties. Impairments on TDR loans are generally measured based ondifficulties and a loan is modified, the present value of expected future cash flows discounted at the effective interest rateeffect of the original loans.modification will be included in the Company’s assessment of the CECL allowance for loan losses. If the Company provides principal forgiveness, the amortized cost basis of the loan is written off against the allowance for loan losses. Generally, when granting concessions,modifying loans, the Company will seek to protect its position by requiring incremental pay downs, additional collateral or guarantees and, in some cases, lookback features or equity interests to offset concessionsthe effects of modifications granted should conditions impacting the loan improve. The Company’s determination of credit losses is impacted by TDRs whereby loans that have gone through TDRs are considered impaired and are assessed for specific reserves. Loans previously restructured under TDRs that subsequently default are reassessed to incorporate the Company’s current assumptions on expected cash flows and additional provision expense is recorded to the extent necessary.

The Company designates a loan as a non-accrual loansloan generally when;when: (i) the principal or coupon interest components of loan payments become 90-days past due; or (ii) in the opinion of the Company, it is doubtful the Company will be able to collect all amountsprincipal and coupon interest due according to the contractual terms of the loan. Interest income on non-accrual loans in which the Company reasonably expects a full recovery of the loan’s outstanding principal balance is recognized when received in cash. Otherwise, income recognition will be suspended and any cash received will be applied as a reduction to the amortized cost.cost basis. A non-accrual loan is returned to accrual status at such time as the loan becomes contractually current and future principal and coupon interest are reasonably assured to be received in accordance with the contractual loan terms. A loan will be written off when management has determined itprincipal and coupon interest is no longer realizable and deemed non-recoverable..non-recoverable.

Recently Adopted Accounting Pronouncements

In March 2022, the FASB issued ASU 2022-02 Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures, (“ASU 2022-02”). ASU 2022-02 eliminated the recognition and measurement guidance for troubled debt restructuring for creditors that have adopted ASC 326 and requires them to make enhanced disclosures about loan modifications for borrowers experiencing financial difficulty. The standard is effective for fiscal years beginning after December 15, 2022. The adoption of ASU 2022-02 did not have a material impact on the Company’s consolidated financial statements.

Recent Accounting Pronouncements Pending Adoption

In March 2022, the FASB issued ASU 2022-02 Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures, (“ASU 2022-02”). ASU 2022-02 eliminates the recognition and measurement guidance for troubled debt restructuring for creditors that have adopted ASC 326 and requires them to make enhanced disclosures about loan modifications for borrowers experiencing financial difficulty. Early adoption is permitted. The Company does not expect the adoption to have a material impact on the Company’s consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, (“ASU 2020-04”). ASU 2020-04 provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform. ASU 2020-04 is effective upon issuance of ASU 2020-04 for contract modifications and hedging relationships on a prospective basis. While the Company is currently assessing the impact of ASU 2020-04, the Company does not expect the adoption to have a material impact on the Company’s consolidated financial statements.

Any new accounting standards not disclosed above that have been issued or proposed by FASB and that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption.

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3. MORTGAGE LOAN RECEIVABLES
 
March 31, 20222023 ($ in thousands)
Outstanding
Face Amount		Carrying
Value		Weighted
Average
Yield (1)(2)		Remaining
Maturity
(years)(2)		Outstanding
Face Amount		Carrying
Value		Weighted
Average
Yield (1)(2)		Remaining
Maturity
(years)(2)(3)
Mortgage loan receivables held for investment, net, at amortized cost:Mortgage loan receivables held for investment, net, at amortized cost:Mortgage loan receivables held for investment, net, at amortized cost:
First mortgage loansFirst mortgage loans$3,803,480 $3,773,593 5.34 %1.7First mortgage loans$3,766,258 $3,750,799 9.16 %1.1
Mezzanine loansMezzanine loans83,954 83,878 10.70 %2.0Mezzanine loans43,334 43,276 11.11 %1.5
Total mortgage loans receivableTotal mortgage loans receivable3,887,434 3,857,471 5.45 %1.7Total mortgage loans receivable3,809,592 3,794,075 9.18 %1.1
Allowance for credit lossesAllowance for credit lossesN/A(32,332)Allowance for credit lossesN/A(25,499)
Total mortgage loan receivables held for investment, net, at amortized costTotal mortgage loan receivables held for investment, net, at amortized cost3,887,434 3,825,139 Total mortgage loan receivables held for investment, net, at amortized cost3,809,592 3,768,576 
Mortgage loan receivables held for sale:Mortgage loan receivables held for sale:Mortgage loan receivables held for sale:
First mortgage loansFirst mortgage loans54,850 53,901  4.44 %9.9First mortgage loans31,350 27,197  4.57 %8.9
TotalTotal$3,942,284 $3,879,040 (3)5.44 %1.8Total$3,840,942 $3,795,773 (4)9.14 %1.1
(1)Includes the impact from interest rate floors. March 31, 20222023 LIBOR and SOFR rates are used to calculate weighted average yield for floating rate loans.
(2)Excludes non-accrual loans of $79.9$53.6 million. Refer to “Non-Accrual Status” below for further details.
(3)Includes $27.4The remaining maturity is calculated based on the initial maturity. The weighted average extended maturity for all loans is 2.4 years.
(4)Net of $15.5 million of deferred origination fees and other items as of March 31, 2022.2023.

As of March 31, 2022, $3.62023, $3.3 billion, or 92.6%87.2%, of the outstanding face amount of our mortgage loan receivables held for investment, net, at amortized cost, were at variable interest rates with $2.9$2.3 billion linked to LIBOR and $0.7$1.0 billion linked to SOFR. Of this $3.6$3.3 billion, 98%100% of these variable interest rate mortgage loan receivables were subject to interest rate floors. As of March 31, 2022, $54.92023, $31.4 million, or 100%, of the outstanding face amount of our mortgage loan receivables held for sale were at fixed interest rates linkedrates.
In February 2023, the Company modified a first mortgage loan with an amortized cost basis of $51.5 million. The modification included an extension of the contractual maturity to SOFR.October 2026, a modification of the interest rate from LIBOR + 2.8% to a fixed rate of 7% (5% current pay, 2% deferred rate) as well as a principal paydown of $3.5 million and the funding of $6.5 million of reserves. As of March 31, 2023 the Company is not accruing the 2% deferred interest component. As of March 31, 2023 the loan is current and has an amortized cost basis of $48.0 million.

December 31, 20212022 ($ in thousands)
Outstanding
Face Amount		Carrying
Value		Weighted
Average
Yield (1)(2)		Remaining
Maturity
(years)(2)		Outstanding
Face Amount		Carrying
Value		Weighted
Average
Yield (1)(2)(3)		Remaining
Maturity
(years)(2)(3)
Mortgage loan receivables held for investment, net, at amortized cost:Mortgage loan receivables held for investment, net, at amortized cost:Mortgage loan receivables held for investment, net, at amortized cost:
First mortgage loansFirst mortgage loans$3,482,715 $3,454,654 5.50 %1.8First mortgage loans$3,841,315 $3,819,860 8.83 %1.3
Mezzanine loansMezzanine loans99,204 99,083 10.92 %1.9Mezzanine loans65,950 65,886 10.62 %1.6
Total mortgage loans receivableTotal mortgage loans receivable3,581,919 3,553,737 5.65 %1.8Total mortgage loans receivable3,907,265 3,885,746 8.85 %1.3
Allowance for credit lossesAllowance for credit lossesN/A(31,752)Allowance for credit lossesN/A(20,755)
Total mortgage loan receivables held for investment, net, at amortized costTotal mortgage loan receivables held for investment, net, at amortized cost3,581,919 3,521,985 Total mortgage loan receivables held for investment, net, at amortized cost3,907,265 3,864,991 
Mortgage loan receivables held for sale:Mortgage loan receivables held for sale:
First mortgage loansFirst mortgage loans31,350 27,391  4.57 %9.2
TotalTotal$3,581,919 $3,521,985 (3)5.65 %1.8Total$3,938,615 $3,892,382 (4)8.82 %1.3
(1)Includes the impact from interest rate floors. December 31, 20212022 LIBOR rates are used to calculate weighted average yield for floating rate loans.
(2)Excludes non-accrual loans of $80.2$53.8 million. Refer to “Non-Accrual Status” below for further details.
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(3)Includes $26.0the impact of one loan with a principal balance of $51.5 million, which was extended through 2026 in January 2023.
(4)Net of $21.5 million of deferred origination fees and other items as of December 31, 2021.2022.
 
As of December 31, 2021, $3.32022, $3.4 billion, or 91.5%87.2%, of the outstanding face amount of our mortgage loan receivables held for investment, net, at amortized cost, were at variable interest rates with $2.3 billion linked to LIBOR.LIBOR and $1.1 billion linked to SOFR. Of this $3.3$3.4 billion, 100%99% of these variable rate mortgage loan receivables were subject to interest rate floors. As of December 31, 2022, $31.4 million, or 100%, of the outstanding face amount of our mortgage loan receivables held for sale were at fixed interest rates.
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For the three months ended March 31, 20222023 and 2021,2022, the activity in our loan portfolio was as follows ($ in thousands):
Mortgage loan receivables held for investment, net, at amortized cost:Mortgage loan receivables held for investment, net, at amortized cost:
Mortgage loans receivableAllowance for credit lossesMortgage loan 
receivables held
for sale		 Mortgage loans receivableAllowance for credit lossesMortgage loan 
receivables held
for sale
Balance, December 31, 2021$3,553,737 $(31,752)$— 
Balance, December 31, 2022Balance, December 31, 2022$3,885,746 $(20,755)$27,391 
Origination of mortgage loan receivablesOrigination of mortgage loan receivables648,507 — 54,850 Origination of mortgage loan receivables32,616 — — 
Repayment of mortgage loan receivablesRepayment of mortgage loan receivables(349,935)— — Repayment of mortgage loan receivables(131,272)— — 
Sale of loans, net (2)— — (949)
Net result from mortgage loan receivables held for sale (1)Net result from mortgage loan receivables held for sale (1)— — (194)
Accretion/amortization of discount, premium and other feesAccretion/amortization of discount, premium and other fees5,162 — — Accretion/amortization of discount, premium and other fees6,985 — — 
Release (addition) of provision for current expected credit loss, net(2)Release (addition) of provision for current expected credit loss, net(2)— (580)— Release (addition) of provision for current expected credit loss, net(2)— (4,744)— 
Balance, March 31, 2022$3,857,471 $(32,332)$53,901 
Balance, March 31, 2023Balance, March 31, 2023$3,794,075 $(25,499)$27,197 
(1)Includes unrealized lower of cost or market adjustment and realized gain/loss on loans held for sale.
(2)Refer to “Allowance for Credit Losses” table below for further detail.

Mortgage loan receivables held for investment, net, at amortized cost:
 Mortgage loans receivableAllowance for credit lossesMortgage loan 
receivables held
for sale
Balance, December 31, 2021$3,553,737 $(31,752)$— 
Origination of mortgage loan receivables648,507 — 54,850 
Repayment of mortgage loan receivables(349,935)— — 
Net result from mortgage loan receivables held for sale (2)— — (949)
Accretion/amortization of discount, premium and other fees5,162 — — 
Release (addition) of provision for current expected credit loss, net (3)— (580)— 
Balance, March 31, 2022$3,857,471 $(32,332)$53,901 
(1)Refer to Note 5 Real Estate and Related Lease Intangibles, Net for further detail on foreclosure ofadditions to real estate.
(2)Represents unrealized lower of cost or market adjustment on loans held for sale.
Mortgage loan receivables held for investment, net, at amortized cost:
 Mortgage loans receivableAllowance for credit lossesMortgage loan
receivables held
for sale
Balance, December 31, 2020$2,354,059 $(41,507)$30,518 
Origination of mortgage loan receivables116,555 — 41,000 
Repayment of mortgage loan receivables(374,735)— (36)
Proceeds from sales of mortgage loan receivables(46,557)— — 
Non-cash disposition of loan via foreclosure(1)(45,000)— — 
Accretion/amortization of discount, premium and other fees3,408 — — 
Release of asset-specific loan loss provision via foreclosure(1)— 1,150 — 
Release (addition) of provision for current expected credit loss, net— 4,116 — 
Balance, March 31, 2021$2,007,730 $(36,241)$71,482 
(1)(3)Refer to Note 5, Real Estate and Related Lease Intangibles, Net“Allowance for Credit Losses” table below for further detail on real estate acquired via foreclosure.



detail.



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Allowance for Credit Losses and Non-Accrual Status ($ in thousands)
Three Months Ended March 31,Three Months Ended March 31,
Allowance for Credit LossesAllowance for Credit Losses20222021Allowance for Credit Losses20232022
Allowance for credit losses at beginning of periodAllowance for credit losses at beginning of period$31,752 $41,507 Allowance for credit losses at beginning of period$20,755 $31,752 
Provision for (release of) current expected credit loss, net (1)Provision for (release of) current expected credit loss, net (1)580 (4,116)Provision for (release of) current expected credit loss, net (1)4,744 580 
Foreclosure of loans subject to asset-specific reserve— (1,150)
Allowance for credit losses at end of periodAllowance for credit losses at end of period$32,332 $36,241 Allowance for credit losses at end of period$25,499 $32,332 
(1)There was no asset specific reserves recorded for the three months ended March 31, 2022 or 2021.

Non-Accrual StatusMarch 31, 2022(1)December 31, 2021(2)
Carrying value of loans on non-accrual status, net of asset-specific reserve$79,877 $80,229 
(1)    There were no asset specific reserves recorded for the three months ended March 31, 2023 or 2022.

Non-Accrual StatusMarch 31, 2023December 31, 2022
Carrying value of loans on non-accrual status, net of asset-specific reserve (1)(2)$53,624 $53,809 
(1)    Includes 2one loan with an amortized cost basis of $30.5 million, for which the Company’s loans, which were originated simultaneously as part of a single transaction and had a combined carrying value of $24.1 million asCompany determined no asset specific reserve was necessary.
(2)    As of March 31, 2022. Additionally, as of March2023 and December 31, 2022 therethe loans on non-accrual status were 2 loans with a combined carrying value of $25.2 million and 1 loan with a carrying value of $30.5 million.
(2)    Includes 2 of the Company’s loans, which were originated simultaneously as part of a single transaction and had a combined carrying value of $24.2 million, 2 loans with a combined carrying value of $25.6 million and 1 loan with a carrying value of $30.5 million.

greater than 90 days past due.

Current Expected Credit Loss (“CECL”)

As of March 31, 2022,2023, the Company has a $33.1$26.2 million allowance for current expected credit losses, of which $32.3$25.5 million pertains to mortgage loan receivables.receivables and $0.7 million relates to unfunded commitments. This allowance includes 3 loans that have an aggregate of $20.2$2.7 million of asset-specific reserves against a carrying valuerelating to two loans with an amortized cost basis of $69.6$25.8 million as of March 31, 2023. The Company concluded that none of its other loans are individually impaired as of March 31, 2023.

As of December 31, 2022, the Company had a $21.5 million allowance for current expected credit losses, of which $20.8 million pertained to mortgage loan receivables and $0.7 million related to unfunded commitments. This allowance included $2.7 million of asset-specific reserves relating to two loans with an amortized cost basis of $26.0 million as of December 31, 2022. The Company concluded that none of its loans, other than the 3 loans discussed in “Non-Accrual Status” below, are individually impaired as of March 31, 2022.

As of December 31, 2021, the Company had a $32.2 million allowance for current expected credit losses, of which $31.8 million pertained to mortgage loan receivables. This allowance included 3 loans that have an aggregate of $20.2 million of asset-specific reserves against a carrying value of $69.9 million as of December 31, 2021. The Company concluded that none of its loans, other than the 3 loans discussed in “Non-Accrual Status” below, are individually impaired as of December 31, 2021.2022.

The total change in provision for loan loss reserves for the three months ended March 31, 2023 was an increase of the provision of $4.7 million. The net increase represents an increase in the general reserve of loans held for investment of $4.7 million and a decrease related to unfunded loan commitments of $8.0 thousand. The increase in provision associated with the general reserve during the three months ended March 31, 2023 is primarily due to adverse changes in macroeconomic scenarios.

The total change in provision for loan loss reserves for the three months ended March 31, 2022 was an increase of $0.9 million. The addition representsrepresented an increase in the general reserve of loans held for investment of $0.6 million and an increase on unfunded loan commitments of $0.3 million. The increase during the three months ended March 31, 2022 iswas primarily due to a net increase in originations quarter over quarter.

The total change in reserve for provision for the three months ended March 31, 2021 was a release of $4.3 million. The release represented a decline in the general reserve of loans held for investment of $4.2 million and the release on unfunded loan commitments of $0.1 million. The release during the three months ended is primarily due to an improvement in macro economic assumptions.

Loan Portfolio by Geographic Region, PropertyCollateral Type and Vintage (amortized cost $ in thousands)
March 31,December 31,March 31,December 31,
Geographic RegionGeographic Region20222021Geographic Region20232022
NortheastNortheast$1,163,181 $1,191,337 
SouthSouth$1,067,323 $937,125 South1,101,731 1,080,132 
Northeast1,186,408 1,080,652 
SouthwestSouthwest650,167 675,069 
MidwestMidwest440,893 434,157 Midwest488,728 496,640 
WestWest491,063 530,599 West364,441 416,556 
Southwest602,204 501,272 
Subtotal mortgage loans receivableSubtotal mortgage loans receivable3,787,891 3,483,805 Subtotal mortgage loans receivable3,768,248 3,859,734 
Individually impaired loans(1)69,580 69,932 
Individually impaired loansIndividually impaired loans25,827 26,012 
Total mortgage loans receivableTotal mortgage loans receivable$3,857,471 $3,553,737 Total mortgage loans receivable$3,794,075 $3,885,746 
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(1)Refer to “Individually Impaired Loans” below for further detail.

Management’s method for monitoring credit is the performance of a loan. A loan is impaired or not impaired based on the expectation that all amounts contractually due under a loan will be collected when due. The primary credit quality indicator management utilizes to assess its current expected credit loss reserve is by viewing the Company’s mortgage loan portfolio by collateral type. The following tables summarize the amortized cost of the mortgage loan portfolio by propertycollateral type as of March 31, 20222023 and December 31, 2021,2022, respectively ($ in thousands):
Amortized Cost Basis by Origination Year as of March 31, 2022Amortized Cost Basis by Origination Year as of March 31, 2023
Collateral TypeCollateral Type20222021202020192018 and EarlierTotalCollateral Type20232022202120202019 and EarlierTotal
MultifamilyMultifamily$14,339 $677,833 $730,370 $— $— $1,422,542 
OfficeOffice$76,325 $693,189 $29,650 $69,991 $155,582 $1,024,737 Office— 78,871 672,894 — 168,387 920,152 
Multifamily329,824 666,979 — 23,464 — 1,020,267 
Mixed UseMixed Use179,135 459,776 88,280 140,948 — 868,139 Mixed Use— 202,526 356,226 26,500 92,005 677,257 
IndustrialIndustrial20,140 95,757 — 110,202 — 226,099 Industrial— 37,690 96,952 — 115,275 249,917 
RetailRetail— 60,250 107,783 — 22,098 190,131 
HospitalityHospitality— 43,344 — 21,579 147,420 212,343 Hospitality— — 45,485 — 92,221 137,706 
Retail11,250 105,649 — 66,269 10,472 193,640 
Manufactured HousingManufactured Housing— 97,873 — 26,437 3,934 128,244 Manufactured Housing— 32,559 82,724 — 2,924 118,207 
OtherOther15,964 26,878 — 7,956 20,055 70,853 Other— 32,457 19,879 — — 52,336 
Self-StorageSelf-Storage— 43,569 — — — 43,569 Self-Storage— — — — — — 
Subtotal mortgage loans receivableSubtotal mortgage loans receivable632,638 2,233,014 117,930 466,846 337,463 3,787,891 Subtotal mortgage loans receivable14,339 1,122,186 2,112,313 26,500 492,910 3,768,248 
Individually Impaired loans (1)Individually Impaired loans (1)— — — — 69,580 69,580 Individually Impaired loans (1)— — — — 25,827 25,827 
Total mortgage loans receivable (2)(1)Total mortgage loans receivable (2)(1)$632,638 $2,233,014 $117,930 $466,846 $407,043 $3,857,471 Total mortgage loans receivable (2)(1)$14,339 $1,122,186 $2,112,313 $26,500 $518,737 $3,794,075 

Amortized Cost Basis by Origination Year as of December 31, 2021Amortized Cost Basis by Origination Year as of December 31, 2022
Collateral TypeCollateral Type20212020201920182017 and EarlierTotalCollateral Type20222021202020192018 and EarlierTotal
MultifamilyMultifamily$702,125 $722,862 $— $— $— $1,424,987 
OfficeOffice$784,556 $29,636 $121,346 $59,073 $73,911 $1,068,522 Office78,754 676,431 29,650 58,684 136,512 980,031 
Mixed UseMixed Use538,949 84,600 140,926 — — 764,475 Mixed Use201,777 351,291 26,500 120,300 — 699,868 
Multifamily697,089 3,131 47,322 — — 747,542 
IndustrialIndustrial37,616 96,486 — 115,545 — 249,647 
RetailRetail60,089 107,305 — 12,953 9,126 189,473 
HospitalityHospitality41,635 — 43,666 90,132 110,890 286,323 Hospitality— 45,416 — 13,843 78,364 137,623 
Retail105,362 — 89,058 — 25,486 219,906 
Industrial41,203 — 108,469 — — 149,672 
Manufactured HousingManufactured Housing117,265 — 26,404 — 3,941 147,610 Manufactured Housing32,515 82,618 — 2,921 — 118,054 
OtherOther26,801 — 8,768 20,743 — 56,312 Other32,353 19,898 — 7,800 — 60,051 
Self-StorageSelf-Storage43,443 — — — — 43,443 Self-Storage— — — — — — 
Subtotal mortgage loans receivableSubtotal mortgage loans receivable2,396,303 117,367 585,959 169,948 214,228 3,483,805 Subtotal mortgage loans receivable1,145,229 2,102,307 56,150 332,046 224,002 3,859,734 
Individually Impaired loans (1)Individually Impaired loans (1)— — — — 69,932 69,932 Individually Impaired loans (1)— — — — 26,012 26,012 
Total mortgage loans receivable (3)(2)Total mortgage loans receivable (3)(2)$2,396,303 $117,367 $585,959 $169,948 $284,160 $3,553,737 Total mortgage loans receivable (3)(2)$1,145,229 $2,102,307 $56,150 $332,046 $250,014 $3,885,746 
(1)Refer to “Not included above is $23.9 million of accrued interest receivableIndividually Impaired Loans” below for further detail. on all loans at March 31, 2023.
(2)Not included above is $11.9 million of accrued interest receivable on all loans at March 31, 2022.
(3)Not included above is $12.6$23.2 million of accrued interest receivable on all loans at December 31, 2021.2022.

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Individually Impaired Loans

As of March 31, 2022, 2 loans with an amortized cost basis of $26.8 million and a combined carrying value of $24.1 million were impaired and on non-accrual status. The loans are collateralized by a mixed use property in the Northeast region, which were originated simultaneously as part of a single transaction and are directly and indirectly secured by the same property. In assessing these collateral-dependent loans for impairment, the most significant consideration is the fair value of the underlying real estate collateral, which includes an in-place long-dated retail lease. The value of such property is most significantly affected by the contractual lease terms and the appropriate market capitalization rates, which are driven by the property’s market strength, the general interest rate environment and the retail tenant’s creditworthiness. In view of these considerations, the Company uses a direct capitalization rate valuation methodology to calculate the fair value of the underlying real estate collateral. The Company previously recorded an asset-specific provision for loss in 2018 on 1 of these loans, with a carrying value of $5.9 million. This asset-specific provision of $2.7 million to reduce the carrying value of the 2 loans collectively to the fair value of the property less the cost to foreclose and sell the property utilizing direct capitalization rates of 4.70% to 5.00%. As of March 31, 2022, the Company determined the loan was adequately provisioned based on the application of direct capitalization rates of 4.88% to 5.23%.

In 2018, a loan secured by a mixed-use property in the Northeast region, with a carrying value of $45.0 million, was determined to be impaired and a reserve of $10.0 million was recorded to reduce the carrying value of the loan to the estimated fair value of the collateral, less the estimated costs to sell. In 2018, the loan experienced a maturity default and its terms were modified in a TDR, which provided for, among other things, the restructuring of the Company’s existing $45.0 million first mortgage loan into a $35.0 million A-Note and a $10.0 million B-Note. The reserve of $10.0 million was applied to the B-Note and the B-Note was placed on non-accrual status. For the three months ended March 31, 2020, management determined that the A-Note was impaired, reflecting a decline in collateral value due to: (i) new information available during the three months ended March 31, 2020 regarding two recent comparable sales and (ii) a change in market conditions. As a result, on March 31, 2020, the Company recorded an asset-specific provision for loss on the A-Note of $7.5 million to reduce the carrying value of this loan to the fair value of the property less the cost to foreclose and sell the property utilizing direct capitalization rates of 7.50% to 8.60%. The Company placed the A-Note on non-accrual status as of March 31, 2020. As of March 31, 2022, the amortized cost basis was $42.7 million, and after allowance for credit loss of the A-Note and the B-Note of $17.5 million, the carrying value of the combined mortgage loans was $25.2 million. As of March 31, 2022, the Company determined the loan was adequately provisioned based on the application of direct capitalization rates of 8.50% to 9.25%.

These non-recurring fair values are considered Level 3 measurements in the fair value hierarchy.

Other Loans on Non-Accrual Status

As of March 31, 2022, 1 other loan secured by a mixed-use property located in the Northeast was on non-accrual status, with a carrying value of $30.5 million. The Company put this loan on non-accrual status in the fourth quarter of 2020 and performed a review of the collateral for the loan. The review consisted of conversations with market participants familiar with the property locations as well as reviewing market data and comparable properties. There are no other loans on non-accrual status other than those discussed above in Individually Impaired Loans as of March 31, 2022.

We continue to actively monitor our mortgage loans receivable portfolio for both the immediate and long term impact of current market conditions, including the inflationary environment, rising interest rates and the ongoing emergence from the COVID-19 pandemic.

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4. REAL ESTATE SECURITIES
 
The Company invests in primarily AAA-rated real estate securities, typically front pay securities, with relatively short duration and significant credit subordination. We continue to actively monitor the impacts of current market conditions on our securities portfolio.

Commercial mortgage backedmortgage-backed securities (“CMBS”), CMBS interest-only securities, U.S. Agency securities, Government National Mortgage Association (“GNMA”) construction securities, GNMA permanent securities and corporate bonds and U.S. Treasury securities are classified as available-for-sale and reported at fair value with changes in fair value recorded in the current period in other comprehensive income. GNMAAs of March 31, 2023, the Company does not intend to sell these investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost bases.

Government National Mortgage Association (“GNMA”), Federal Home Loan Mortgage Corp (“FHLMC”) and equity securities are recorded at fair value with changes in fair value recorded in current period earnings. Equity securities are reported at fair value with changes in fair value recorded in current period earnings. The following is a summary of the Company’s securities at March 31, 20222023 and December 31, 20212022 ($ in thousands):

March 31, 20222023
   Gross Unrealized  Weighted Average    Gross Unrealized  Weighted Average
Asset TypeAsset TypeOutstanding
Face Amount		 Amortized Cost BasisGainsLossesCarrying
Value		# of
Securities		Rating (1)Coupon %Yield %Remaining
Duration
(years)		Asset TypeOutstanding
Face Amount		 Amortized Cost BasisGainsLosses (7)Carrying
Value		# of
Securities		Rating (1)Coupon %Yield %Remaining
Duration
(years)
CMBSCMBS$659,685  $659,099 $8 $(11,063)$648,044 (2)71 AAA1.82 %1.90 %1.81CMBS$503,183  $502,710 $43 $(17,563)$485,190 (2)70 AAA5.72 %5.76 %1.01
CMBS interest-only(3)CMBS interest-only(3)1,287,812 13,952 352 (52)14,252 (4)13 AAA0.57 %4.57 %1.76CMBS interest-only(3)898,620 (3)9,493 177 (134)9,536 (4)9 AAA0.59 %3.82 %1.37
GNMA interest-only(3)(5)54,895 407 75 (31)451 14 AAA0.36 %5.29 %3.55
GNMA interest-only(5)GNMA interest-only(5)44,966 (3)265 139 (19)385 14 AAA0.31 %5.95 %3.09
Agency securitiesAgency securities52  53 — — 53 — AAA4.00 %2.78 %1.92Agency securities32  33 — (1)32 1 AAA4.00 %2.70 %1.42
U.S. Treasury securitiesU.S. Treasury securities25,000 24,811 2 (41)24,772 6 AAAN/A4.10 %0.29
Total debt securitiesTotal debt securities$2,002,444 $673,511 $435 $(11,146)$662,800 98 0.98 %1.96 %1.81Total debt securities1,471,801 537,312 361 (17,758)519,915 (6)100 2.37 %5.72 %1.02
Equity securities(7)N/A148 14 — 162 2 N/AN/AN/AN/A
Equity securitiesEquity securitiesN/A160 — (47)113 1 N/AN/AN/AN/A
Allowance for current expected credit lossesAllowance for current expected credit lossesN/A— — (20)(20)Allowance for current expected credit lossesN/A— — (20)(20)
Total real estate securities$2,002,444  $673,659 $449 $(11,166)$662,942 100  
Total securitiesTotal securities$1,471,801  $537,472 $361 $(17,825)$520,008 101  

December 31, 20212022
   Gross Unrealized  Weighted Average    Gross Unrealized  Weighted Average
Asset TypeAsset TypeOutstanding
Face Amount		 Amortized
Cost Basis		GainsLossesCarrying
Value		# of
Securities		Rating (1)Coupon %Yield %Remaining
Duration
(years)		Asset TypeOutstanding
Face Amount		 Amortized
Cost Basis		GainsLosses (7)Carrying
Value		# of
Securities		Rating (1)Coupon %Yield %Remaining
Duration
(years)
CMBSCMBS$691,402  $691,026 $775 $(5,508)$686,293 (2)73 AAA1.57 %1.57 %2.06CMBS$562,839  $562,246 $— $(20,913)$541,333 (2)71 AAA5.22 %5.32 %1.06
CMBS interest-only(3)CMBS interest-only(3)1,302,551 15,268 617 — 15,885 (4)13 AAA0.45 %5.67 %1.88CMBS interest-only(3)1,026,195 (3)10,498 121 (176)10,443 (4)10 AAA0.41 %3.65 %1.45
GNMA interest-only(3)(5)59,075 518 105 (64)559 14 AA+0.38 %4.97 %3.64
GNMA interest-only(5)GNMA interest-only(5)45,369 (3)285 17 (21)281 14 AAA0.31 %4.23 %3.30
Agency securitiesAgency securities557  560 3 — 563 2 AA+2.47 %1.58 %0.69Agency securities36  36 — (1)35 1 AAA4.00 %2.70 %1.54
U.S. Treasury securitiesU.S. Treasury securities36,000 35,374 6 (52)35,328 10 AAAN/A4.17 %0.60
Total debt securitiesTotal debt securities$2,053,585 $707,372 $1,500 $(5,572)$703,300 102 0.83 %1.67 %2.06Total debt securities$1,670,439 $608,439 $144 $(21,163)$587,420 (6)106 2.06 %5.29 %1.07
Equity securitiesEquity securitiesN/A160 — (41)119 1 N/AN/AN/AN/A
Allowance for current expected credit lossesAllowance for current expected credit lossesN/A— — (20)(20)Allowance for current expected credit lossesN/A— — (20)(20)
Total real estate securitiesTotal real estate securities$2,053,585  $707,372 $1,500 $(5,592)$703,280 102  Total real estate securities$1,670,439  $608,599  $144  $(21,224) $587,519  107   
(1)Represents the weighted average of the ratings of all securities in each asset type, expressed as an S&P equivalent rating. For each security rated by multiple rating agencies, the highest rating is used. RatingsThe ratings provided were determined by third-party rating agencies as of a particular date,agencies. The rates may not be current and are subject to change (including the assignment of a “negative outlook” or “credit watch”) at any time.
(2)As of March 31, 20222023 and December 31, 2021, respectively,2022, includes $9.6 million and $9.9$9.0 million of restricted securities which are designated as risk retention securities under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, (the “Dodd Frankas amended (“Dodd-Frank Act”) and are therefore subject to transfer restrictions over the term of the securitization trust and are classified as held-to-maturity and reported at amortized cost.
(3)The amounts presented represent the principal amount of the mortgage loans outstanding in the pool in which the interest-only securities participate.
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(4)As of March 31, 20222023 and December 31, 2021, respectively,2022, includes $0.5 million and $0.5$0.4 million of restricted securities which are designated as risk retention securities under the Dodd-Frank Act and are therefore subject to transfer restrictions over the term of the securitization trust and are classified as held-to-maturity and reported at amortized cost.
(5)AgencyGNMA interest-only securities are recorded at fair value with changes in fair value recorded in current period earnings. The Company’s AgencyGNMA interest-only securities are considered to be hybrid financial instruments that contain embedded derivatives. As a result, the Company has elected to account for them as hybrid instruments in their entirety at fair value
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with changes in fair value recognized in unrealized gain (loss) on Agency interest-only securities in the consolidated statements of income.
(6)The Company has electedCompany’s investments in debt securities represents an ownership interest in unconsolidated VIEs. The Company’s maximum exposure to account for equityloss from these unconsolidated VIEs is the amortized cost basis of the securities at fair value withwhich represents the purchase price of the investment adjusted by any unamortized premiums or discounts as of the reporting date.
(7)Based on the Company’s analysis, including review of interest rate changes in fair value recorded inand current period earnings.levels of subordination, among other factors, the unrealized loss positions are determined to be due to market factors other than credit.
 
The following summarizes the carrying value of the Company’s debt securities by remaining maturity based upon expected cash flows at March 31, 20222023 and December 31, 20212022 ($ in thousands):
 
March 31, 20222023
Asset TypeAsset TypeWithin 1 year1-5 years5-10 yearsAfter 10 yearsTotalAsset TypeWithin 1 year1-5 years5-10 yearsAfter 10 yearsTotal
CMBSCMBS$275,365 $366,518 $— $6,162 $648,045 CMBS$304,060 $181,131 $— $— $485,191 
CMBS interest-onlyCMBS interest-only756 13,496 — — 14,252 CMBS interest-only2,365 7,172 — — 9,537 
GNMA interest-onlyGNMA interest-only80 216 154 — 450 GNMA interest-only36 210 138 — 384 
Agency securitiesAgency securities— 53 — — 53 Agency securities— 31 — — 31 
U.S. Treasury securitiesU.S. Treasury securities24,772 — — — 24,772 
Allowance for current expected credit lossesAllowance for current expected credit losses— — — — (20)Allowance for current expected credit losses— — — — (20)
Total real estate securities$276,201 $380,283 $154 $6,162 $662,780 
Total securities (1)Total securities (1)$331,233 $188,544 $138 $— $519,895 
(1)Excluded from the table above are $0.1 million of equity securities.
 
December 31, 20212022
Asset TypeAsset TypeWithin 1 year1-5 years5-10 yearsAfter 10 yearsTotalAsset TypeWithin 1 year1-5 years5-10 yearsAfter 10 yearsTotal
CMBSCMBS$304,357 $354,670 $10,307 $16,958 $686,292 CMBS$346,272 $195,061 $— $— $541,333 
CMBS interest-onlyCMBS interest-only1,018 14,868 — — 15,886 CMBS interest-only937 9,506 — — 10,443 
GNMA interest-onlyGNMA interest-only102 278 179 — 559 GNMA interest-only40 111 130 — 281 
Agency securitiesAgency securities503 60 — — 563 Agency securities— 35 — — 35 
U.S. Treasury securitiesU.S. Treasury securities32,451 2,877 — — 35,328 
Allowance for current expected credit lossesAllowance for current expected credit losses— — — — (20)Allowance for current expected credit losses— — — — (20)
Total real estate securities$305,980 $369,876 $10,486 $16,958 $703,280 
Total securities (1)Total securities (1)$379,700 $207,590 $130 $— $587,400 
(1)Excluded from the table above are $0.1 million of equity securities.

During the three months ended March 31, 20222023, the Company had $43 thousand of salessold $0.5 million of equity securities. During the three months ended March 31, 2021,2022, the Company had no salessold $43 thousand of equity securities.


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5. REAL ESTATE AND RELATED LEASE INTANGIBLES, NET

The following tables present additional detail related to ourCompany’s real estate portfolio, netassets were comprised of the following ($ in thousands):
March 31, 2022December 31, 2021March 31, 2023December 31, 2022
LandLand$174,851 $186,940 Land$158,802 $158,802 
BuildingBuilding711,102 765,690 Building626,280 625,655 
In-place leases and other intangiblesIn-place leases and other intangibles130,385 142,335 In-place leases and other intangibles114,689 114,687 
Undepreciated real estate and related lease intangiblesUndepreciated real estate and related lease intangibles1,016,338 1,094,965 Undepreciated real estate and related lease intangibles899,771 899,144 
Less: Accumulated depreciation and amortizationLess: Accumulated depreciation and amortization(223,481)(229,271)Less: Accumulated depreciation and amortization(206,505)(199,008)
Real estate and related lease intangibles, net(2)Real estate and related lease intangibles, net(2)$792,857 $865,694 Real estate and related lease intangibles, net(2)$693,266 $700,136 
Below market lease intangibles, net (other liabilities)(1)Below market lease intangibles, net (other liabilities)(1)$(32,298)$(33,203)Below market lease intangibles, net (other liabilities)(1)$(30,369)$(30,892)
(1)Below market lease intangibles is net is inclusive of $13.1$14.2 million and $12.8$13.6 million of accumulated amortization as of March 31, 20222023 and December 31, 2021,2022, respectively.

(2)
Not included in the table above are twoThere was unencumbered real estate investments totaling $55.4of $170.2 million classified as real estate held for sale on the consolidated balance sheetand $140.3 million as of March 31, 2022. This real estate is comprised of $14.1 million of land, $45.6 million of building,2023 and $3.6 million of in-place leases and other intangibles to aggregate to $63.3 million of undepreciated real estate and lease intangibles. The property also includes $7.9 million of accumulated depreciation and amortization. The Company held $32.5 million of undepreciated real estate and lease intangibles held for sale as of December 31, 2021.2022, respectively.

At March 31, 20222023 and December 31, 2021,2022, the Company held foreclosed properties included in real estate and related lease intangibles, net with a carrying valuevalues of $96.1$101.6 million and $97.3$103.1 million, respectively.

The following table presents depreciation and amortization expense on real estate recorded by the Company ($ in thousands):
Three Months Ended March 31, Three Months Ended March 31,
20222021 20232022
Depreciation expense(1)Depreciation expense(1)$7,088 $7,990 Depreciation expense(1)$6,200 $7,088 
Amortization expenseAmortization expense2,254 1,546 Amortization expense1,329 2,254 
Total real estate depreciation and amortization expenseTotal real estate depreciation and amortization expense$9,342 $9,536 Total real estate depreciation and amortization expense$7,529 $9,342 
(1)Depreciation expense on the consolidated statements of income also includes $8 thousand$0.1 million and $25$8 thousand of depreciation on corporate fixed assets for the three months ended March 31, 20222023 and 2021,March 31, 2022, respectively.

The Company’s intangible assets are comprised of in-place leases, above market leases and other intangibles. The following tables present additional detail related to our intangible assets ($ in thousands):
March 31, 2022December 31, 2021 March 31, 2023December 31, 2022
Gross intangible assets(1)Gross intangible assets(1)$134,012 $146,593 Gross intangible assets(1)$114,689 $114,687 
Accumulated amortizationAccumulated amortization64,385 67,500 Accumulated amortization51,125 49,725 
Net intangible assetsNet intangible assets$69,627 $79,093 Net intangible assets$63,564 $64,962 
(1)Includes $3.3 million and $3.8$2.8 million of unamortized above market lease intangibles, which are included in real estate and related lease intangibles, net on the consolidated balance sheets as of March 31, 20222023 and December 31, 2021, respectively.2022.

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The following table presents increases/reductions in operating lease income related to the amortization of above or below market leases recorded by the Company ($ in thousands):
Three Months Ended March 31, Three Months Ended March 31,
20222021 20232022
Reduction in operating lease income for amortization of above market lease intangibles acquiredReduction in operating lease income for amortization of above market lease intangibles acquired$(76)$(92)Reduction in operating lease income for amortization of above market lease intangibles acquired$(72)$(76)
Increase in operating lease income for amortization of below market lease intangibles acquiredIncrease in operating lease income for amortization of below market lease intangibles acquired520 570 Increase in operating lease income for amortization of below market lease intangibles acquired526 520 
TotalTotal$444 $478 Total$454 $444 

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The following table presents expected adjustment to operating lease income and expected amortization expense during the next five years and thereafter related to the above and below market leases and acquired in-place lease and other intangibles for property owned as of March 31, 20222023 ($ in thousands):
Period Ending December 31,Period Ending December 31,Adjustment to Operating Lease IncomeAmortization ExpensePeriod Ending December 31,Increase/(Decrease) to Operating Lease IncomeAmortization Expense
2022$679 $3,771 
20232023906 3,889 2023$730 $3,398 
20242024906 3,889 2024973 4,531 
20252025906 3,889 2025973 4,391 
20262026906 3,888 2026976 3,740 
20272027976 3,554 
ThereafterThereafter24,715 47,021 Thereafter22,968 41,179 
TotalTotal$29,018 $66,347 Total$27,596 $60,793 

Rent Receivables Unencumbered Real Estate, Operating Lease Income and Impairment of Real Estate

There were $1.2$0.8 million and $0.4$1.3 million of rent receivables included in other assets on the consolidated balance sheets as of March 31, 20222023 and December 31, 2021, respectively. There was unencumbered real estate of $99.3 million and $85.9 million as of March 31, 2022, and December 31, 2021, respectively.

During the three months ended March 31, 2022 and 2021, the Company recorded $4.0 million and $1.0 million respectively, of real estate operating income, which excludes rental income.Operating Lease Income & Tenant Reimbursements

The following is a schedule of non-cancellable, contractual, future minimum rent under leases (excluding property operating expenses paid directly by tenant under net leases) at March 31, 20222023 ($ in thousands):
Period Ending December 31,Period Ending December 31,AmountPeriod Ending December 31,Amount
2022$47,218 
2023202357,334 2023$40,682 
2024202455,718 202449,994 
2025202553,712 202549,801 
2026202650,402 202648,424 
2027202746,267 
ThereafterThereafter249,708 Thereafter196,855 
TotalTotal$514,092 Total$432,023 

Acquisitions

DuringTenant reimbursements, which consist of real estate taxes and other municipal charges paid by the Company, which were reimbursable by our tenants pursuant to the terms of the lease agreements, were $1.1 million and $1.6 million for the three months ended March 31, 2023 and 2022, respectively. Tenant reimbursements are included in operating lease income on the Company’s consolidated statements of income.
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Acquisitions

The Company did not have any acquisitions during the three months ended March 31, 2023 and acquired the following properties during the three months ended March 31, 2022 ($ in thousands):
Acquisition DateTypePrimary Location(s)Purchase Price/Fair Value on the Date of ForeclosureOwnership Interest (1)
February 2022(2)ApartmentsNew York, NY$15,436 100.0%
Total real estate acquisitions$15,436 
(1)Properties were consolidated as of acquisition date.
(2)In February 2022, the Company acquired, via change in control, a previously held interest in a non-controlling equity investment in a mixed use property with one remaining residential condo unit and one remaining retail condo unit in New York, New York. The carrying value of the property at the time of change in control was $15.4 million, which was determined to be fair value. The fair value of the remaining condo unit was determined based on comparable sales in the building and the value of the remaining retail unit was valued utilizing a capdirect capitalization rate of 5.5%. The key inputs used to determine fair value were determined to be Level 3 inputs.

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During the three months ended March 31, 2021, the Company acquired the following properties ($ in thousands):
Acquisition DateTypePrimary Location(s)Purchase Price/Fair Value on the Date of ForeclosureGain/(Loss) on Loan ForeclosureOwnership Interest (1)
Real estate acquired via foreclosure
February 2021(2)HotelMiami, FL43,750 — (2)100.0%
Total real estate acquired via foreclosure43,750 $— 
Total real estate acquisitions$43,750 
(1)Properties were consolidated as of acquisition date.
(2)In February 2021, the Company acquired a hotel in Miami, FL via foreclosure, recognizing a $25.8 thousand loss, which is included in its consolidated statements of income. The property previously served as collateral for a mortgage loan receivable held for investment with a basis of $45.1 million, net of an asset-specific loan loss provision of $1.2 million recorded in the three months ended December 31, 2020. In February 2021, the foreclosed property was sold without any gain or loss. The Company recorded no revenues from its 2021 acquisitions for the three months ended March 31, 2021.

The Company allocates purchase consideration based on relative fair values, and real estate acquisition costs are capitalized as a component of the cost of the assets acquired for asset acquisitions. During the three months ended March 31, 2022, and March 31, 2021, all acquisitions were determined to be asset acquisitions.

Sales

The Company did not have any sales during the three months ended March 31, 2023 and sold the following properties during the three months ended March 31, 2022 ($ in thousands):

Sales DateTypePrimary Location(s)Net Sales ProceedsNet Book ValueRealized Gain/(Loss)Properties
March 2022OfficeEwing, NJ$38,652 $24,134 $14,518 1 
March 2022WarehouseConyers, GA40,752 26,116 14,636 1 
Totals(1)$79,404 $50,250 $29,154 
(1)Includes $3.7 million of defeasance costs upon repayment of the mortgage financing in connection with the sales that is recorded within interest expense on the consolidated statement of income, such amount was correspondingly paid by the buyer and received by the Company as part of the sale and recorded in fee and other income on the consolidated statement of income.

The Company sold the following properties during the three months ended March 31, 2021 ($ in thousands):

Sales DateTypePrimary Location(s)Net Sales ProceedsNet Book ValueRealized Gain/(Loss)PropertiesUnits SoldUnits Remaining
February 2021HotelMiami, FL$43,750 $43,750 $— 1 — — 
Totals$43,750 $43,750 $— 
We continue to actively monitor our real estate properties for both the immediate and long term impact of current market conditions, including the inflationary environment, rising interest rates and the ongoing emergence from the COVID-19 pandemic.
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6. INVESTMENT IN AND ADVANCES TO UNCONSOLIDATED JOINT VENTURES
The following is a summary of the Company’s investments in and advances to unconsolidated joint ventures, which we account for using the equity method, as of March 31, 2022 and December 31, 2021 ($ in thousands):
EntityMarch 31, 2022December 31, 2021
Grace Lake JV, LLC$5,243 $5,434 
24 Second Avenue Holdings LLC— 17,720 
Investment in unconsolidated joint ventures$5,243 $23,154 
The following is a summary of the Company’s allocated earnings (losses) based on its ownership interests from investment in unconsolidated joint ventures for the three months ended March 31, 2022 and 2021 ($ in thousands):
 Three Months Ended March 31,
Entity20222021
Grace Lake JV, LLC$434 $297 
24 Second Avenue Holdings LLC— 139 
Earnings (loss) from investment in unconsolidated joint ventures$434 $436 

Grace Lake JV, LLC
In connection with the origination of a loan in April 2012, the Company received a 25% equity interest with the right to convert upon a capital event. On March 22, 2013, the loan was refinanced, and the Company converted its interest into a 19% limited liability company membership interest in Grace Lake JV, LLC (“Grace Lake LLC”), which holds an investment in an office building complex. After taking into account the preferred return of 8.25% and the return of all equity remaining in the property to the Company’s operating partner, the Company is entitled to 25% of the distribution of all excess cash flows and all disposition proceeds upon any sale. The Company is not legally required to provide any future funding to Grace Lake LLC. The Company accounts for its interest in Grace Lake LLC using the equity method of accounting, as it has a 19% investment, compared to the 81% investment of its operating partner and does not control the entity. The Company holds its investment in Grace Lake LLC in a TRS.

The Company’s investment in Grace Lake LLC is an unconsolidated joint venture, which is a variable interest entity (“VIE”) for which the Company is not the primary beneficiary. This joint venture was deemed to be a VIE primarily based on the fact there are disproportionate voting and economic rights within the joint venture. The Company determined that it was not the primary beneficiary of this VIE based on the fact that the Company has a passive investment and no control of this entity and therefore does not have controlling financial interests in this VIE. The Company’s maximum exposure to loss is limited to its investment in the VIE. The Company has not provided financial support to this VIE that it was not previously contractually required to provide.

During the three months ended March 31, 2022, the Company received a $0.6 million distribution from its investment in Grace Lake LLC. There were no distributions received during the three months ended March 31, 2021.

24 Second Avenue Holdings LLC

In February 2022, the Company assumed all management and control over 24 Second Avenue Holdings LLC upon maturity of its preferred equity interest in the entity and therefore, reclassified its interest to real estate held for investment on the balance sheet at cost. At the time of the change in control, 24 Second Avenue Holdings LLC owned the two remaining units of the property, one remaining residential condo unit and the retail condo ground floor space. Refer to Note 5 - Real estate and related intangibles, net for further disclosure.



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Combined Summary Financial Information for Unconsolidated Joint Ventures

The following is a summary of the combined financial position of the unconsolidated joint ventures in which the Company had investment interests as of March 31, 2022 and December 31, 2021 ($ in thousands):
 March 31, 2022(1)December 31, 2021
Total assets$68,368 $109,873 
Total liabilities58,109 66,387 
Partners’/members’ capital$10,259 $43,486 
(1) As of March 31, 2022, the balance represents only the Grace Lake JV, LLC interest.

The following is a summary of the combined results from operations of the unconsolidated joint ventures for the period in which the Company had investment interests during the three months ended March 31, 2022 and 2021 ($ in thousands):
 Three Months Ended March 31,
 20222021
Total revenues$5,073 $4,514 
Total expenses3,337 3,323 
Net income (loss)$1,736 $1,191 
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7. DEBT OBLIGATIONS, NET

The details of the Company’s debt obligations at March 31, 20222023 and December 31, 20212022 are as follows ($ in thousands):
 
March 31, 20222023
Debt ObligationsDebt ObligationsCommitted /
Principal Amount		Carrying Value of Debt ObligationsCommitted but UnfundedInterest Rate at March 31, 2022(1)Current Term MaturityRemaining Extension OptionsEligible CollateralCarrying Amount of CollateralFair Value of CollateralDebt ObligationsCommitted /
Principal Amount		Carrying Value of Debt ObligationsCommitted but UnfundedInterest Rate at March 31, 2023(1)Current Term MaturityRemaining Extension OptionsEligible CollateralCarrying Amount of CollateralFair Value of Collateral
Committed Loan Repurchase Facility(2)Committed Loan Repurchase Facility(2)$500,000 $208,225 $291,775 1.9%—2.1%12/19/2022(3)(4)$309,099 $309,099 Committed Loan Repurchase Facility(2)$500,000 $318,983 $181,017 6.54%—7.04%9/27/2025(2)(3)$431,809 $431,395 
Committed Loan Repurchase Facility100,000 45,290 54,710 2.35%—3.1%2/26/2023(5)(6)63,519 63,519 
Committed Loan Repurchase FacilityCommitted Loan Repurchase Facility300,000 119,118 180,882 2.15%—3.15%12/19/2022(7)(8)184,616 184,616 Committed Loan Repurchase Facility300,000 206,867 93,133 6.54%—7.85%12/19/2023(4)(5)306,449 303,632 
Committed Loan Repurchase FacilityCommitted Loan Repurchase Facility100,000 — 100,000 —%——%4/30/2024(9)(4)— — Committed Loan Repurchase Facility100,000 47,415 52,585 6.55%—6.55%4/30/2024(6)(3)64,263 64,263 
Committed Loan Repurchase FacilityCommitted Loan Repurchase Facility100,000 39,675 60,325 1.71%—1.71%1/3/2023(3)(4)52,766 52,766 Committed Loan Repurchase Facility100,000 77,959 22,041 6.06%—6.56%1/2/2024(7)(3)103,560 103,560 
Committed Loan Repurchase FacilityCommitted Loan Repurchase Facility100,000 — 100,000 —%——%1/22/2024(10)(8)— — Committed Loan Repurchase Facility100,000 — 100,000 —%—%1/22/2024(8)(5)— — 
Committed Loan Repurchase FacilityCommitted Loan Repurchase Facility100,000 — 100,000 —%——%10/21/2022(11)(12)— — Committed Loan Repurchase Facility100,000 — 100,000 —%——%7/14/2023(9)(10)— — 
Total Committed Loan Repurchase FacilitiesTotal Committed Loan Repurchase Facilities1,300,000 412,308 887,692 610,000 610,000 Total Committed Loan Repurchase Facilities1,200,000 651,224 548,776 906,081 902,850 
Committed Securities Repurchase Facility(2)Committed Securities Repurchase Facility(2)635,114 28,839 606,275 1.09%—1.42%5/27/2023 N/A(13)50,007 50,007 Committed Securities Repurchase Facility(2)100,000 8,032 91,968 5.46%—5.71%5/27/2024 N/A(11)9,150 9,150 
Uncommitted Securities Repurchase FacilityUncommitted Securities Repurchase Facility N/A (14)193,561  N/A (14)0.66%—2.06%4/2022 - 6/2022 N/A(13)206,501 206,501 (15)Uncommitted Securities Repurchase Facility N/A (12)110,011  N/A (12)5.32%—6.68%4/27/2023 N/A(11)121,387 121,387 (13)
Total Repurchase FacilitiesTotal Repurchase Facilities1,700,000 634,708 1,258,853 866,508 866,508 Total Repurchase Facilities1,300,000 769,267 640,744 1,036,618 1,033,387 
Revolving Credit FacilityRevolving Credit Facility266,430 — 266,430 —%——%2/11/2023(16) N/A (17)N/A (17)N/A (17)Revolving Credit Facility323,850 — 323,850 —%——%7/27/2023(14) N/A (15)N/A (15)N/A (15)
Mortgage Loan FinancingMortgage Loan Financing646,126 648,666 — 3.75%—6.16%2022 - 2031(18) N/A(19)748,995 970,126 (20)Mortgage Loan Financing469,385 469,690 — 4.25%—8.53%2024-2031
(16)		 N/A(17)523,041 667,818 (18)
Secured Financing Facility110,185 109,630 (21)— 10.75%—10.75%5/6/2023N/A(22)199,338 199,459 
CLO DebtCLO Debt1,064,365 1,055,402 (23)— 1.60%—4.05%2024 - 2026(24)N/A(4)1,310,873 1,310,873 CLO Debt1,064,365 1,059,593 (19)— 5.88%—8.33%2024-2026
(20)		N/A(3)1,331,079 1,331,079 
Borrowings from the FHLBBorrowings from the FHLB263,000 263,000 —  0.61%—2.74%2022 - 2024 N/A(25)298,937 298,937 (26)Borrowings from the FHLB213,000 213,000 —  2.74%—5.18%2023-2024 N/A(21)250,747 250,747 (22)
Senior Unsecured NotesSenior Unsecured Notes1,649,794 1,631,905 (27)— 4.25%—5.25%2025 - 2029 N/A N/A (28)N/A (28)N/A (28)Senior Unsecured Notes1,585,063 1,570,878 (23)— 4.25%—5.25%2025-2029 N/A N/A (24)N/A (24)N/A (24)
Total Debt Obligations, NetTotal Debt Obligations, Net$5,699,900 $4,343,311 $1,525,283 $3,424,651 $3,645,903 Total Debt Obligations, Net$4,955,663 $4,082,428 $964,594 $3,141,485 $3,283,031 
(1)LIBOR and Term SOFR rates in effect as of March 31, 20222023 are used to calculate interest rates for floating rate debt, as applicable.
(2)The combined committed amounts for the loan repurchase facility and the securities repurchase facility total $900.0 million, with maximum capacity on the loan repurchase facility of $500.0 million, and maximum capacity on the securities repurchase facility of $900.0 million less outstanding commitments on the loan repurchase facility.
(3)NaNTwo 12-month extension periods at Company’s option. No new advances are permitted after the initial maturity date.
(4)(3)First mortgage commercial real estate loans and senior and pari passu interests therein. It does not include the real estate collateralizing such loans.
(5)(4)NaN additional 12-month period at Company’s option.
(6)First mortgage commercial real estate loans. It does not include the real estate collateralizing such loans.
(7)NaNTwo additional 364-day periods at Company’s option.
(8)(5)First mortgage and mezzanine commercial real estate loans and senior and pari passu interests therein. It does not include the real estate collateralizing such loans.
(9)(6)NaNThree additional 12-month extension period and 2 additional 6-month extension periods at Company’s option.
(10)(7)NaNOne additional 12-month extension periods at Company’s option. No new advances are permitted.
(8)Two additional 12-month extension periods at Company's option. No new advances permitted during the final 12-month period.
(11)(9)The Company may extend periodically with lender’s consent. At no time can the maturity of the facility exceed 364 days from the date of determination.
(12)(10)First mortgage, junior and mezzanine commercial real estate loans, and certain senior and/or pari passu interests therein.
(13)(11)Commercial real estate securities. It does not include the first mortgage commercial real estate loans collateralizing such securities.
(14)(12)Represents uncommitted securities repurchase facilities for which there is no committed amount subject to future advances.
(15)(13)Includes $2.0$1.9 million of restricted securities under the risk retention rules of the Dodd-Frank Act. These securities are accounted for as held-to-maturity and recorded at amortized cost basis.
(16)(14)NaNFour additional 12-month periods at Company’s option.
(17)(15)The obligations under the Revolving Credit Facility are guaranteed by the Company and certain of its subsidiaries and secured by equity pledges in certain Company subsidiaries.
(18)(16)Anticipated repayment dates.
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(19)(17)Certain of our real estate investments serve as collateral for our mortgage loan financing.
(20)(18)Using undepreciated carrying value of commercial real estate to approximate fair value.
(21)(19)Presented net of unamortized debt issuance costs of $0.3 million and an unamortized discount of $0.3 million related to the Purchase Right (described in detail under Secured Financing Facility below) at March 31, 2022.
(22)First mortgage commercial real estate loans. Substitution of collateral and conversion of loan collateral to mortgage collateral are permitted with lender’s approval.
(23)Presented net of unamortized debt issuance costs of $9.0$4.8 million at March 31, 2022.2023.
(24)(20)Represents the estimated maturity date based on the remaining reinvestment period and underlying loan maturities.
(25)(21)Investment grade commercial real estate securities and cash.U.S. Treasury securities. It does not include the first mortgage commercial real estate loans collateralizing such securities.
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(22)Includes $7.3$6.6 million of restricted securities under the risk retention rules of the Dodd-Frank Act. These securities are accounted for as held-to-maturity and recorded at amortized cost basis.
(27)(23)Presented net of unamortized debt issuance costs of $17.9$14.2 million at March 31, 2022.2023.
(28)(24)The obligations under the senior unsecured notes are guaranteed by the Company and certain of its subsidiaries.

December 31, 20212022
Debt ObligationsDebt ObligationsCommitted /
Principal Amount		Carrying Value of Debt ObligationsCommitted but UnfundedInterest Rate at December 31, 2021(1)Current Term MaturityRemaining Extension OptionsEligible CollateralCarrying Amount of CollateralFair Value of CollateralDebt ObligationsCommitted /
Principal Amount		Carrying Value of Debt ObligationsCommitted but UnfundedInterest Rate at December 31, 2021(1)Current Term MaturityRemaining Extension OptionsEligible CollateralCarrying Amount of CollateralFair Value of Collateral
Committed Loan Repurchase Facility(2)Committed Loan Repurchase Facility(2)$500,000 $37,207 $462,793 1.61%—1.61%12/19/2022(3)(4)$82,966 $82,966 Committed Loan Repurchase Facility(2)$500,000 $318,983 $181,017 6.07%—6.57%9/27/2025(2)(3)$428,477 $429,276 
Committed Loan Repurchase FacilityCommitted Loan Repurchase Facility100,000 — 100,000 —%——%2/26/2023(4)(5)— — 
Committed Loan Repurchase FacilityCommitted Loan Repurchase Facility100,000 45,290 54,710 2.06%—2.81%2/26/2022(5)(6)62,972 62,972 Committed Loan Repurchase Facility300,000 157,558 142,442 6.19%—7.07%12/19/2023(6)(7)244,102 244,102 
Committed Loan Repurchase FacilityCommitted Loan Repurchase Facility300,000 75,837 224,163 1.86%—2.86%12/19/2022(7)(8)127,926 127,926 Committed Loan Repurchase Facility100,000 47,415 52,585 6%—6%4/30/2024(8)(3)63,307 63,307 
Committed Loan Repurchase FacilityCommitted Loan Repurchase Facility100,000 — 100,000 —%——%4/30/2024(9)(4)— — Committed Loan Repurchase Facility100,000 77,959 22,041 5.74%—6.24%1/3/2023(2)(3)103,393 103,393 
Committed Loan Repurchase FacilityCommitted Loan Repurchase Facility100,000 26,183 73,817 2.23%—2.23%1/3/2023(3)(4)48,720 48,720 Committed Loan Repurchase Facility100,000 — 100,000 —%—%1/22/2024(9)(7)— — 
Committed Loan Repurchase FacilityCommitted Loan Repurchase Facility100,000 — 100,000 —%——%10/21/2022(10)(11)— — Committed Loan Repurchase Facility100,000 14,979 85,021 7.07%—7.07%7/14/2023(10)(11)21,206 21,206 
Total Committed Loan Repurchase FacilitiesTotal Committed Loan Repurchase Facilities1,200,000 184,517 1,015,483 322,584 322,584 Total Committed Loan Repurchase Facilities1,300,000 616,894 683,106 860,485 861,284 
Committed Securities Repurchase Facility(2)Committed Securities Repurchase Facility(2)862,794 44,139 818,655 0.65%—1.05%5/27/2023 N/A(12)50,522 50,522 Committed Securities Repurchase Facility(2)100,000 8,640 91,360 5.04%—5.29%5/27/2023N/A(12)10,023 10,023 
Uncommitted Securities Repurchase FacilityUncommitted Securities Repurchase Facility N/A (13)215,921  N/A (13)0.54%—2.06%1/2022 - 6/2022 N/A(12)242,629 242,629 (14)Uncommitted Securities Repurchase FacilityN/A (13)222,328 N/A (13)4.73%—6%3/2/2023N/A(12)247,351 247,351 (14)
Total Repurchase FacilitiesTotal Repurchase Facilities1,600,000 444,577 1,371,344 615,735 615,735 Total Repurchase Facilities1,400,000 847,862 774,466 1,117,859 1,118,658 
Revolving Credit FacilityRevolving Credit Facility266,430 — 266,430 —%——%2/11/2022(15) N/A (16)N/A (16)N/A (16)Revolving Credit Facility323,850 — 323,850 —%——%7/27/2023(15)N/A (16)N/A (16)N/A (16)
Mortgage Loan FinancingMortgage Loan Financing690,927 693,797 — 3.75%—6.16%2022 - 2031(17) N/A(18)805,007 1,033,372 (19)Mortgage Loan Financing497,454 497,991 — 4.25%—8.03%2023 - 2031(17)N/A(18)559,885 710,977 (19)
Secured Financing Facility136,444 132,447 (20)— 10.75%—10.75%5/6/2023N/A(21)244,399 244,553 
CLO DebtCLO Debt1,064,365 1,054,774 (22)— 1.66%—1.75%2024 - 2026(23)N/A(4)1,299,116 1,299,116 CLO Debt1,064,365 1,058,462 (20)— 5.52%—7.97%2024 - 2026(21)N/A(3)1,308,654 1,308,654 
Borrowings from the FHLBBorrowings from the FHLB263,000 263,000 —  0.36%—2.74%2022 - 2024 N/A(24)301,792 301,792 (25)Borrowings from the FHLB213,000 213,000 — 2.74%—4.70%2023 - 2024N/A(22)248,806 248,806 (23)
Senior Unsecured NotesSenior Unsecured Notes1,649,794 1,631,108 (26)— 4.25%—5.25%2025 - 2029 N/A N/A (27)N/A (27)N/A (27)Senior Unsecured Notes1,643,794 1,628,382 (24)— 4.25%—5.25%2025 - 2029N/AN/A (25)N/A (25)N/A (25)
Total Debt Obligations, NetTotal Debt Obligations, Net$5,670,960 $4,219,703 $1,637,774 $3,266,049 $3,494,568 Total Debt Obligations, Net$5,142,463 $4,245,697 $1,098,316 $3,235,204 $3,387,095 
(1)LIBOR and Term SOFR rates in effect as of December 31, 20212022 are used to calculate interest rates for floating rate debt.debt, as applicable.
(2)The combined committed amounts for the loan repurchase facility and the securities repurchase facility total $900.0 million, with maximum capacity on the loan repurchase facility of $500.0 million, and maximum capacity on the securities repurchase facility of $900.0 million less outstanding commitments on the loan repurchase facility.
(3)NaNTwo 12-month extension periods at Company’s option. No new advances are permitted after the initial maturity date.
(4)(3)First mortgage commercial real estate loans and senior and pari passu interests therein. It does not include the real estate collateralizing such loans.
(5)(4)NaNOne additional 12-month periodsperiod at Company’s option.
(6)(5)First mortgage commercial real estate loans. It does not include the real estate collateralizing such loans.
(7)(6)NaNTwo additional 364-day periods at Company’s option.
(8)(7)First mortgage and mezzanine commercial real estate loans and senior and pari passu interests therein. It does not include the real estate collateralizing such loans.
(9)(8)NaNThree additional 12-month extension period and 2 additional 6-month extension periods at Company’s option.
(9)Two additional 12-month extension periods at Company's option. No new advances are permitted during the final 12-month period.
(10)The Company may extend periodically with lender’s consent. At no time can the maturity of the facility exceed 364 days from the date of determination.
(11)First mortgage, junior and mezzanine commercial real estate loans, and certain senior and/or pari passu interests therein.
(12)Commercial real estate securities. It does not include the first mortgage commercial real estate loans collateralizing such securities.
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(13)Represents uncommitted securities repurchase facilities for which there is no committed amount subject to future advances.
(14)Includes $2.1$2.0 million of restricted securities under the risk retention rules of the Dodd-Frank Act. These securities are accounted for as held-to-maturity and recorded at amortized cost basis.
(15)NaNFour additional 12-month periods at Company’s option.
(16)The obligations under the Revolving Credit Facility are guaranteed by the Company and certain of its subsidiaries and secured by equity pledges in certain Company subsidiaries.
(17)Anticipated repayment dates.
(18)Certain of our real estate investments serve as collateral for our mortgage loan financing.
(19)Using undepreciated carrying value of commercial real estate to approximate fair value.
(20)Presented net of unamortized debt issuance costs of $1.9 million and an unamortized discount of $2.1 million related to the Purchase Right (described in detail under Secured Financing Facility below) at December 31, 2021.
(21)First mortgage commercial real estate loans. Substitution of collateral and conversion of loan collateral to mortgage collateral are permitted with lender’s approval.
(22)Presented net of unamortized debt issuance costs of $9.6$5.9 million at December 31, 2021.2022.
(23)(21)Represents the estimated maturity date based on the remaining reinvestment period and underlying loan maturities.
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(22)Investment grade commercial real estate securities and cash.securities. It does not include the first mortgage commercial real estate loans collateralizing such securities.
(25)(23)Includes $7.5$6.6 million of restricted securities under the risk retention rules of the Dodd-Frank Act. These securities are accounted for as held-to-maturity and recorded at amortized cost basis.
(26)(24)Presented net of unamortized debt issuance costs of $18.7$15.4 million at December 31, 2021.2022.
(27)(25)The obligations under the senior unsecured notes are guaranteed by the Company and certain of its subsidiaries.

Committed Loan and Securities Repurchase Facilities

The Company has entered into 7six committed master repurchase agreements, as outlined in the March 31, 20222023 table above, totaling $1.3$1.2 billion of credit capacity in order to finance its lending activities. Assets pledged as collateral under these facilities are limited to whole mortgage loans or participation interests in mortgage loans collateralized by first liens on commercial properties and mezzanine debt. The Company also has a term master repurchase agreement with a major U.S. bank to finance CMBS totaling $900 million less approved commitments under that bank’s loan repurchase agreement.$100 million. The Company’s repurchase facilities include covenants covering net worth requirements, minimum liquidity levels, maximum leverage ratios, and minimum fixed charge coverage ratios. The Company was in compliance with all covenants as of March 31, 20222023 and December 31, 2021.2022.

The Company has the option to extend some of the current facilities subject to a number of conditions, including satisfaction of certain notice requirements, the absence of an event of default, and the absence of a margin deficit, all as defined in the repurchase facility agreements. The lenders have sole discretion with respect to the inclusion of collateral in these facilities and the determination of the market value of the collateral on a daily basis, to be exercised on a good faith basis, and have the right in certain cases to require additional collateral, a full and/or partial repayment of the facilities (margin call), or a reduction in unused availability under the facilities, sufficient to rebalance the facilities if the estimated market value of the included collateral declines.

As of March 31, 2023, the Company had total debt obligations of $769.3 million outstanding pursuant to repurchase agreements with six counterparties. As of March 31, 2023 no counterparties held collateral that exceeded the amounts borrowed under the related repurchase agreements by more than $152.9 million, or 10% of our total equity. As of March 31, 2023, the weighted average haircut, or the percent of collateral value in excess of the loan amount, under our repurchase agreements was 26%. There have been no significant fluctuations in haircuts across asset classes on our repurchase facilities.

Revolving Credit Facility

The Company’s Revolving Credit Facility provides for an aggregate maximum borrowing amount of $266.4$323.9 million, including a $25.0 million sublimit for the issuance of letters of credit. The Revolving Credit Facility is available on a revolving basis to finance the Company’s working capital needs and for general corporate purposes. On November 25, 2019,July 27, 2022, the Company amended theits Revolving Credit Facility to add 2increase the maximum borrowing amount to $323.9 million, extend the maturity date to July 27, 2023 with four additional one-year extension options, extending the final maturity date to February 2025. The amendment also provided for a reduction ofand reduce the interest rate to the sum of one-month LIBORTerm SOFR plus 3.00%a fixed margin of 2.50%. The amendment also provides for reductions in the fixed margin upon the upgradeachievement of the Company’sinvestment grade credit ratings, which occurred in January 2020.ratings. As of March 31, 2022, interest on the Revolving Credit Facility is one-month LIBOR plus 3.00% per annum payable monthly in arrears. As of March 31, 2022,2023, the Company had no outstanding borrowings on the Revolving Credit Facility, but still maintains the ability to draw $266.4$323.9 million.

The obligations under the Revolving Credit Facility are guaranteed by the Company and certain of its subsidiaries. The Revolving Credit Facility is secured by a pledge of the shares of (or other ownership or equity interests in) certain subsidiaries to the extent the pledge is not restricted under existing regulations, law or contractual obligations.
 
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The Company is subject to customary affirmative covenants and negative covenants, including limitations on the incurrence of additional debt, liens, restricted payments, sales of assets and affiliate transactions. In addition, the Company is required to comply with financial covenants relating to minimum net worth, maximum leverage, minimum liquidity, and minimum fixed charge coverage, consistent with our other credit facilities. The Company’s ability to borrow is dependent on, among other things, compliance with the financial covenants. The Revolving Credit Facility contains customary events of default, including non-payment of principal or interest, fees or other amounts, failure to perform or observe covenants, cross-default to other indebtedness, the rendering of judgments against the Company or certain of our subsidiaries to pay certain amounts of money and certain events of bankruptcy or insolvency.

Debt Issuance Costs

As of March 31, 20222023 and December 31, 2021,2022, the amountamounts of unamortized costs relating to our master repurchase facilities and Revolving Credit Facility were $3.5$4.9 million and $2.9$5.0 million, respectively, and are included in other assets in the consolidated balance sheets.

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Uncommitted Securities Repurchase Facilities
 
The Company has also entered into multiple uncommitted master repurchase agreements collateralized by real estate securities with several counterparties. The borrowings under these agreements have typical advance rates between 75% and 95% of the fair value of collateral, which is primarily AAA-rated securities.

Mortgage Loan Financing
 
These non-recourse debt agreements provide for secured financing at rates ranging from 3.75%4.25% to 6.16%8.53%, and, as of March 31, 2022,2023, have anticipated maturity dates between 2022-2031,2024-2031, with the earliest expected in May 2022.an average term of 3.9 years. These mortgage loans have carrying amounts of $648.7$469.7 million and $693.8$498.0 million, net of unamortized premiums of $2.8$2.3 million and $3.2$2.4 million as of March 31, 20222023 and December 31, 2021,2022, respectively, 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. The Company recorded $0.3$0.2 million and $0.3 million of premium amortization, which decreased interest expense for the three months ended March 31, 20222023 and 2021,2022, respectively. The mortgage loans are collateralized by real estate and related lease intangibles, net, of $749.0$523.0 million and $805.0$559.9 million as of March 31, 20222023 and December 31, 2021,2022, respectively. During each of the three months ended March 31, 20222023 and March 31, 2021,2022, the Company did not execute any new term debt agreements to finance properties in its real estate portfolio.

Secured Financing Facility

On April 30, 2020, the Company entered into a strategic financing arrangement with a U.S. multinational corporation (the “Lender”), under which the Lender provided the Company with $206.4 million in senior secured financing (the “Secured Financing Facility”) to fund transitional and land loans. The Secured Financing Facility is secured on a first lien basis on a portfolio of certain of the Company’s loans, matures on May 6, 2023, and borrowings thereunder bear interest at LIBOR (or a minimum of 0.75% if greater) plus 10.0%, with a minimum interest premium clause, of which approximately $2.0 million remains as of March 31, 2022. The Senior Financing Facility is non-recourse, subject to limited exceptions, and does not contain mark-to-market provisions. Additionally, the Senior Financing Facility provides the Company optionality to modify or restructure loans or forbear in exercising remedies, which maximizes the Company’s financial flexibility.

As part of the strategic financing, the Lender also had the ability to make an equity investment in the Company of up to 4.0 million Class A common shares at $8.00 per share, subject to certain adjustments (the “Purchase Right”). The Purchase Right was exercised in full at $8.00 per share on December 29, 2020. In addition, the Lender has agreed not to sell, transfer, assign, pledge, hypothecate, mortgage, dispose of or in any way encumber the shares acquired as a result of exercising the Purchase Right for a period of time following the exercise date. In connection with the issuance of the Purchase Right, the Company and the Lender entered into a registration rights agreement, pursuant to which the Company has agreed to provide customary demand and piggyback registration rights to the Lender.

The Purchase Right was classified as equity and the $200.9 million of net proceeds from the original issuance were allocated $192.5 million to the originally issued debt obligation and $8.4 million to the Purchase Right using the relative fair value method. The commitment to issue shares will not be subsequently remeasured. The $8.4 million allocated to the Purchase Right was treated as a discount to the debt and amortized over the expected maturity of the Purchase Right to interest expense.

As of March 31, 2022, the Company had $109.6 million of borrowings outstanding under the secured financing facility
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included in debt obligations on its consolidated balance sheets, net of unamortized debt issuance costs of $0.3 million and a $0.3 million unamortized discount related to the Purchase Right.

Collateralized Loan Obligations (“CLO”) Debt

On July 13, 2021, a consolidated subsidiary of the Company completed a privately-marketed CLO transaction, which generated $498.2 million of gross proceeds to Ladder, financing $607.5 million of loans (“Contributed July 2021 CLO Loans”) at an 82% advance rate on a matched term, non-mark-to-market and non-recourse basis. A consolidated subsidiary of the Company retained an 18% subordinate and controlling interest in the CLO. The Company retained consent rights over major decisions with respect to the servicing of the Contributed July 2021 CLO Loans, including the right to appoint and replace the special servicer under the CLO. The CLO is a VIE and the Company is the primary beneficiary and, therefore, consolidated the VIE - Refer to Note 10,9, Consolidated Variable Interest Entities.

On December 2, 2021, a consolidated subsidiary of the Company completed a privately marketed CLO transaction, which generated $566.2 million of gross proceeds to Ladder, financing $729.4 million of loans (“Contributed December 2021 CLO Loans”) at a maximum 77.6% advance rate on a matched term, non-mark-to-market and non-recourse basis. A consolidated subsidiary of the Company retained an 15.6% subordinate and controlling interest in the CLO. The Company also held 2two additional tranches as investments totaling 6.8% interest in the CLO. The Company retained consent rights over major decisions with respect to the servicing of the Contributed December 2021 CLO Loans, including the right to appoint and replace the special servicer under the CLO. The CLO is a VIE and the Company is the primary beneficiary and, therefore, consolidated the VIE - Refer to Note 10,9, Consolidated Variable Interest Entities.

As of March 31, 2022,2023, the Company had $1.1 billion of matched term, non-mark-to-market and non-recourse CLO debt included in debt obligations on its consolidated balance sheets, which includes unamortized debt issuance costs of $9.0$4.8 million.

Borrowings from the Federal Home Loan Bank (“FHLB”)

On July 11, 2012, Tuebor, a consolidated subsidiary of the Company, became a member of the FHLB and subsequently drew its first secured funding advances from the FHLB. As of February 19, 2021, pursuant to a final rule adopted by the Federal Housing Finance Agency (the “FHFA”) regarding the eligibility of captive insurance companies, Tuebor’s membership in the FHLB has been terminated, although outstanding advances may remain outstanding until their scheduled maturity dates. Funding for future advance paydowns is expected to be obtained from the natural amortization and/or sales of securities collateral, or from other financing sources. There is no assurance that the FHFA or the FHLB will not take actions that could adversely impact Tuebor’s existing advances. 

As of March 31, 2022,2023, Tuebor had $263.0$213.0 million of borrowings outstanding, with terms of 0.440.4 years to 2.51.5 years (with a weighted average of 1.71.0 year), and interest rates of 0.61%2.74% to 2.74%5.18% (with a weighted average of 1.12%4.98%). As of March 31, 2022,2023, collateral for the borrowings was comprised of $262.2$250.7 million of CMBS, U.S. Agency and U.S. AgencyTreasury securities (with advance rates of 71.7% to 95.7%97.1%) and $36.7 million of restricted cash..

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Tuebor is subject to state regulations which require that dividends (including dividends to the Company as its parent) may only be made with regulatory approval. However, there can be no assurance that we would obtain such approval if sought. Largely as a result of this restriction, approximately $1.2 billion$836.8 million of Tuebor’s member’s capital was restricted from transfer via dividend to Tuebor’s parent without prior approval of state insurance regulators at March 31, 2022.2023. To facilitate intercompany cash funding of operations and investments, Tuebor and its parent maintain regulator-approved intercompany borrowing/lending agreements.

Senior Unsecured Notes
As of March 31, 2022,2023, the Company had $1.6 billion of unsecured corporate bonds outstanding. These unsecured financings were comprised of $348.0$327.8 million in aggregate principal amount of 5.25% senior notes due 2025 (the “2025 Notes”), $651.8$614.4 million in aggregate principal amount of 4.25% senior notes due 2027 (the “2027 Notes”) and $650.0$642.9 million in aggregate principal of 4.75% senior notes due 2029 (the “2029 Notes,” collectively with the 2025 Notes and the 2027 Notes, the “Notes”).

32During the three months ended March 31, 2023, the Company repurchased $16.2 million of the 2025 Notes and recognized a net gain of $1.3 million on extinguishment of debt, $36.4 million of the 2027 Notes and recognized a net gain of $6.4 million on extinguishment of debt, and $6.1 million of the 2029 Notes and recognized a net gain of $1.4 million on extinguishment of debt.
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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 and certain subsidiaries of LCFH currently guarantee the obligations under the Notes and the indenture. The Company was in compliance with all covenants of the Notes as of March 31, 20222023 and 2021. Unamortized debt issuance costs of $17.9 million and $18.7 million are included in senior unsecured notes as of March 31, 2022 and December 31, 2021, respectively, in accordance with GAAP.2022.

2025 Notes

On September 25, 2017, LCFH issued $400.0 million in aggregate principal amount of 5.250% senior notes due October 1, 2025. The 2025 Notes require interest payments semi-annually in cash in arrears, on April 1 and October 1 of each year, beginning on April 1, 2018. The 2025 Notes are unsecured, and are subject to an unencumbered assets to unsecured debt covenant. The Company may redeem the 2025 Notes prior to their stated maturity, in whole or in part, at any time or from time to time, prior to their stated maturity upon not less than 15 nor more than 60 days’with required notice and at a redemption price as specified in theeach respective indenture governing the 2025 Notes, plus accrued and unpaid interest, if any, to the redemption date. On May 2, 2018, theThe board of the directors has authorized the Company to repurchase any or all of the 2025 Notes from time to time without further approval. As of March 31, 2022, the remaining $348.0 million in aggregate principal amount of the 2025 Notes is due October 1, 2025.

2027 NotesSecured Financing Facility

On JanuaryApril 30, 2020, LCFH issued $750.0the Company entered into a strategic financing arrangement with a U.S. multinational corporation (the “Lender”), under which the Lender provided the Company with $206.4 million in aggregate principal amountsenior secured financing (the “Secured Financing Facility”) to fund transitional and land loans. The Secured Financing Facility was secured on a first lien basis on a portfolio of 4.25% senior notes due February 1, 2027.certain of the Company’s loans and scheduled to mature on May 6, 2023, and borrowings thereunder bore interest at LIBOR (or a minimum of 0.75% if greater) plus 10.0%, with a minimum interest premium clause. The 2027 Notes require interest payments semi-annually in cash in arrears on August 1 and February 1Senior Financing Facility, which was fully paid as of each year, beginning on August 1, 2020. The 2027 Notes are unsecured and areJune 30, 2022, was non-recourse, subject to an unencumbered assets to unsecured debt covenant. The Company may redeemlimited exceptions, and did not contain mark-to-market provisions. Additionally, the 2027 Notes, in whole, at any time, or from time to time, prior to their stated maturity. At any time on or after February 1, 2023,Senior Financing Facility provided the Company may redeemoptionality to modify or restructure loans or forbear in exercising remedies, which maximized the 2027 Notes in whole or in part, upon not less than 15 nor more than 60 days’ notice, at a redemption price defined in the indenture governing the 2027 Notes, plus accrued and unpaid interest, if any, to the redemption date. Net proceeds of the offering were used to repay secured indebtedness. On February 26, 2020, the board of the directors authorized the Company to repurchase any or all of the 2027 Notes from time to time without further approval. As of March 31, 2022, the remaining $651.8 million in aggregate principal amount of the 2027 Notes is due February 1, 2027.Company’s financial flexibility.

2029 Notes

On June 23, 2021, LCFH issued $650.0 million in aggregate principal amount of 4.75% senior notes due June 15, 2029. The 2029 Notes require interest payments semi-annually in cash in arrears on June 15 and December 15 of each year, beginning December 15, 2021. The 2029 Notes are unsecured and are subject to an unencumbered asset to unsecured debt covenant. The Company may redeem the 2029 Notes, in whole, at any time, or from time to time, prior to their stated maturity. At any time on or after June 15, 2024, the Company may redeem the 2029 Notes in whole or in part, upon not less than 10 nor more than 60 days’ notice, at a redemption price defined in the indenture governing the 2029 Notes, plus accrued and unpaid interest, if any, to the redemption date. Net proceeds of the offering were used for general corporate purposes, including funding the Company’s pipeline of new loans, investments in its core business lines and repayment of indebtedness. On June 24, 2021, the board of the directors authorized the Company to repurchase any or all of the 2029 Notes from time to time without further approval. As of March 31, 2022, the remaining $650.0 million in aggregate principal amount of the 2029 Notes is due June 15, 2029.

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Combined Maturity of Debt Obligations

The following schedule reflects the Company’s contractual payments under all borrowings by maturity ($ in thousands): 
Period ending December 31,Period ending December 31,Borrowings by
Maturity(1)		Period ending December 31,Borrowings by
Maturity(1)
2022$419,166 
20232023250,586 2023$170,361 
20242024594,019 2024603,270 
20252025526,006 2025651,924 
2026202626,424 202689,161 
20272027808,995 
ThereafterThereafter1,487,611 Thereafter712,740 
SubtotalSubtotal3,303,812 Subtotal3,036,451 
Debt issuance costs included in senior unsecured notesDebt issuance costs included in senior unsecured notes(17,889)Debt issuance costs included in senior unsecured notes(14,185)
Debt issuance costs included in secured financing facility(257)
Discount on secured financing facility related to Purchase Right(298)
Debt issuance costs included in mortgage loan financing(255)
Premiums included in mortgage loan financing(3)2,796 
Debt issuance costs included in mortgage loan financingsDebt issuance costs included in mortgage loan financings(1,701)
Premiums included in mortgage loan financings(2)Premiums included in mortgage loan financings(2)2,270 
Total (2)(3)Total (2)(3)$3,287,909 Total (2)(3)$3,022,835 
(1)The allocation of repayments under our committed loan repurchase facilities and Secured Financing Facility is based on the earlier ofof: (i) the maturity date of each agreement,agreement; or (ii) the maximum maturity date of the collateral loans, assuming all extension options are exercised by the borrower.
(2)Represents deferred gains on intercompany mortgage loans, secured by our own real estate, sold into securitizations. These premiums are amortized as a reduction to interest expense.
(3)Total does not include $1.1 billion of consolidated CLO debt obligations and the related debt issuance costs of $9.0$4.8 million, as the satisfaction of these liabilities will be paid through cash flow from loan collateral including amortization and will not require cash outlays from us.
(3)Represents deferred gains on intercompany loans, secured by our own real estate, sold into securitizations. These premiums are amortized as a reduction to interest expense.

Financial Covenants

The Company’s debt facilities are subject to covenants whichthat require the Company to maintain a minimum level of total equity. Largely as a result of this restriction, approximately $871.4 million of the total equity is restricted from payment as a dividend by the Company at March 31, 2022.2023.

The Company was in compliance with all covenants described in the financial statements as of March 31, 2022.2023.

LIBOR Transition

Specifically, we haveThe Company has implemented or are in the process of implementing fallback language for our LIBOR-based bi-lateral committed repurchase facilities and revolving credit facility,Revolving Credit Facility, including adjustments as applicable to maintain the anticipated economic terms of the existing contracts. As of March 31, 2022, 84.9%2023, 59.8% and 15.1%40.2% of our floating rate debt obligations bear interest indexed to LIBOR and Term SOFR, respectively. We continueThe Company continues to monitor the transition guidance provided by the ARRC,Alternative Reference Rates Committee, the International Swaps and Derivatives Association, Inc., the Financial Accounting Standards Board and other relevant regulators, agencies and industry working groups, and we continue to engage with clients, lenders, market participants and other industry leaders as the transition from LIBOR progresses.




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8.7. DERIVATIVE INSTRUMENTS
 
The Company primarily uses derivative instruments primarily to economically manage the fair value variability of fixed rate assets caused by interest rate fluctuations and overall portfolio market risk. The following is a breakdown of the derivatives outstanding as of March 31, 20222023 and December 31, 20212022 ($ in thousands):
 
March 31, 20222023
 Fair ValueRemaining
Maturity
(years)		  Fair ValueRemaining
Maturity
(years)
Contract TypeContract TypeNotionalAsset(1)Liability(1)Contract TypeNotionalAsset(1)Liability(1)
CapsCaps    Caps    
1 Month LIBOR$15,050 $55 $— 2.44
1 Month Term SOFR1 Month Term SOFR$808 $1,470 $— 1.38
FuturesFutures    Futures    
5-year Swap25,400 42 — 0.25
10-year Swap83,800 137 — 0.25
5-year Treasury-Note Futures5-year Treasury-Note Futures44,200 $— $20 0.25
10-year Treasury-Note Futures10-year Treasury-Note Futures61,400 — 29 0.25
Total futuresTotal futures109,200 179 —  Total futures105,600 — 49  
Total derivativesTotal derivatives$124,250 $234 $—  Total derivatives$106,408 $1,470 $49  
(1)Shown as derivative instruments at fair value, in the accompanying consolidated balance sheets.

December 31, 20212022
 Fair ValueRemaining
Maturity
(years)		  Fair ValueRemaining
Maturity
(years)
Contract TypeContract TypeNotionalAsset(1)Liability(1)Contract TypeNotionalAsset(1)Liability(1)
CapsCaps    Caps    
1 Month LIBOR$84,621 $60 $— 0.57
1 Month Term SOFR1 Month Term SOFR$90,000 $1,804 $— 1.68
FuturesFutures    Futures    
5-year Swap6,500 76 — 0.25
10-year Swap23,000 266 — 0.25
5-year Treasury-Note Futures5-year Treasury-Note Futures44,200 51 — 0.25
10-year Treasury-Note Futures10-year Treasury-Note Futures61,400 71 — 0.25
Total futuresTotal futures29,500 342 —  Total futures105,600 122 —  
OptionsOptions    
OptionsOptions9,100 112 — 0.20
Total derivativesTotal derivatives$114,121 $402 $—  Total derivatives$204,700 $2,038 $—  
(1)Shown as derivative instruments at fair value, in the accompanying consolidated balance sheets.
 
The following table indicates the net realized gains (losses) and unrealized appreciation (depreciation) on derivatives, by primary underlying risk exposure, as included in net result from derivatives transactions in the consolidated statements of income for the three months ended March 31, 2023 and 2022 and 2021($($ in thousands):
Three Months Ended March 31, 2022 Three Months Ended March 31, 2023
Contract TypeContract TypeUnrealized
Gain/(Loss)		Realized
Gain/(Loss)		Net Result
from
Derivative
Transactions		Contract TypeUnrealized
Gain/(Loss)		Realized
Gain/(Loss)		Net Result
from
Derivative
Transactions
CapsCaps$(6)$— $(6)Caps$(334)$237 $(97)
FuturesFutures(162)3,303 3,141 Futures(171)(1,861)(2,032)
OptionsOptions131 (244)(113)
TotalTotal$(168)$3,303 $3,135 Total$(374)$(1,868)$(2,242)
 
 Three Months Ended March 31, 2021
Contract TypeUnrealized
Gain/(Loss)		Realized
Gain/(Loss)		Net Result
from
Derivative
Transactions
Futures$2 $4,769 $4,771 
Total$2 $4,769 $4,771 

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 Three Months Ended March 31, 2022
Contract TypeUnrealized
Gain/(Loss)		Realized
Gain/(Loss)		Net Result
from
Derivative
Transactions
Caps$(6)$— $(6)
Futures(162)3,303 3,141 
Total$(168)$3,303 $3,135 

Futures

Collateral posted with our futures counterparties is segregated in the Company’s books and records. Interest rate futures are centrally cleared by the Chicago Mercantile Exchange (“CME”) through a futures commission merchant. Interest rate futures that are governed by an International Swaps and Derivatives Association (“ISDA”) agreement provide for bilateral collateral pledging based on the counterparties’ market value. The counterparties have the right to re-pledge the collateral posted but have the obligation to return the pledged collateral, or substantially the same collateral, if agreed to by us, as the market value of the interest rate futures change.

The Company is required to post initial margin and daily variation margin for our interest rate futures that are centrally cleared by CME. CME determines the fair value of our centrally cleared futures, including daily variation margin. Variation margin pledged on the Company’s centrally cleared interest rate futures is settled against the realized results of these futures. The Company’s counterparties held $0.8$2.7 million and $0.5$2.5 million of cash margin as collateral for derivatives as of March 31, 2022,2023 and December 31, 2021,2022, respectively, which is included in restricted cash in the consolidated balance sheets.

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9.8. OFFSETTING ASSETS AND LIABILITIES
 
The following tables present both gross information and net information about derivatives and other instruments eligible for offset in the statement of financial position as of March 31, 20222023 and December 31, 2021.2022. The Company’s accounting policy is to record derivative asset and liability positions on a gross basis; therefore, the following tables present the gross derivative asset and liability positions recorded on the balance sheets, while also disclosing the eligible amounts of financial instruments and cash collateral to the extent those amounts could offset the gross amount of derivative asset and liability positions. The actual amounts of collateral posted by or received from counterparties may be in excess of the amounts disclosed in the following tables as the following only disclose amounts eligible to be offset to the extent of the recorded gross derivative positions.

The following table represents offsetting of financial assets and derivative assets as of March 31, 20222023 ($ in thousands):
DescriptionDescriptionGross amounts of
recognized assets		Gross amounts
offset in the
balance sheet		Net amounts of
assets presented
in the balance
sheet		Gross amounts not offset in the
balance sheet		Net amountDescriptionGross amounts of
recognized assets		Gross amounts
offset in the
balance sheet		Net amounts of
assets presented
in the balance
sheet		Gross amounts not offset in the
balance sheet		Net amount
Financial
instruments		Cash collateral
received/(posted)		Financial
instruments		Cash collateral
received/(posted)(1)
DerivativesDerivatives$234 $— $234 $— $(805)$234 Derivatives$1,421 $— $1,421 $— $(2,655)$(1,234)
TotalTotal$234 $— $234 $— $(805)$234 Total$1,421 $— $1,421 $— $(2,655)$(1,234)
(1)Included in restricted cash on consolidated balance sheets.

The following table represents offsetting of financial liabilities and derivative liabilities as of March 31, 20222023 ($ in thousands): 
DescriptionDescriptionGross amounts of
recognized
liabilities		Gross amounts
offset in the
balance sheet		Net amounts of
liabilities
presented in the
balance sheet		Gross amounts not offset in the
balance sheet		Net amountDescriptionGross amounts of
recognized
liabilities		Gross amounts
offset in the
balance sheet		Net amounts of
liabilities
presented in the
balance sheet		Gross amounts not offset in the
balance sheet		Net amount
Financial
instruments
collateral		Cash collateral
posted/(received)(1)		Financial
instruments
collateral		Cash collateral
posted/(received)(1)
Repurchase agreementsRepurchase agreements$634,708 $— $634,708 $634,708 $3,178 $631,531 Repurchase agreements$769,266 $— $769,266 $769,266 $3,333 $765,933 
TotalTotal$634,708 $— $634,708 $634,708 $3,983 $630,726 Total$769,266 $— $769,266 $769,266 $3,333 $765,933 
(1)Included in restricted cash on consolidated balance sheets.

The following table represents offsetting of financial assets and derivative assets as of December 31, 20212022 ($ in thousands):
DescriptionDescriptionGross amounts of
recognized assets		Gross amounts
offset in the
balance sheet		Net amounts of
assets presented
in the balance
sheet		Gross amounts not offset in the
balance sheet		Net amountDescriptionGross amounts of
recognized assets		Gross amounts
offset in the
balance sheet		Net amounts of
assets presented
in the balance
sheet		Gross amounts not offset in the
balance sheet		Net amount
Financial
instruments		Cash collateral
received/(posted)(1)		Financial
instruments		Cash collateral
received/(posted)(1)
DerivativesDerivatives$402 $— $402 $— $(526)$402 Derivatives$2,038 $— $2,038 $— $(2,505)$(467)
TotalTotal$402 $— $402 $— $(526)$402 Total$2,038 $— $2,038 $— $(2,505)$(467)
(1)Included in restricted cash on consolidated balance sheets.

The following table represents offsetting of financial liabilities and derivative liabilities as of December 31, 20212022 ($ in thousands):
DescriptionGross amounts of
recognized
liabilities		Gross amounts
offset in the
balance sheet		Net amounts of
liabilities
presented in the
balance sheet		Gross amounts not offset in the
balance sheet		Net amount
Financial
instruments
collateral		Cash collateral
posted/(received)(1)
Repurchase agreements$444,577 $— $444,577 $444,577 $1,975 $442,603 
Total$444,577 $— $444,577 $444,577 $1,975 $442,603 
DescriptionGross amounts of
recognized
liabilities		Gross amounts
offset in the
balance sheet		Net amounts of
liabilities
presented in the
balance sheet		Gross amounts not offset in the
balance sheet		Net amount
Financial
instruments
collateral		Cash collateral
posted/(received)(1)
Repurchase agreements$847,863 $— $847,863 $847,863 $19,128 $828,735 
Total$847,863 $— $847,863 $847,863 $19,128 $828,735 
(1)Included in restricted cash on consolidated balance sheets.
Master netting agreements that the Company has entered into with its derivative and repurchase agreement counterparties allow for netting of the same transaction, in the same currency, on the same date. Assets, liabilities, and collateral subject to master netting agreements as of March 31, 20222023 and December 31, 20212022 are disclosed in the tables above. The Company does not present its derivative and repurchase agreements net on the consolidated financial statements as it has elected gross presentation. 
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10.9. CONSOLIDATED VARIABLE INTEREST ENTITIES

The Company consolidates on its balance sheet 2two CLOs that are considered VIEs as of March 31, 20222023 and December 31, 20212022 ($ in thousands):

March 31, 2022December 31, 2021March 31, 2023December 31, 2022
Notes 3 & 7
Restricted cashRestricted cash$— $369 Restricted cash$1,170 $4,902 
Mortgage loan receivables held for investment, net, at amortized costMortgage loan receivables held for investment, net, at amortized cost1,310,873 1,299,116 Mortgage loan receivables held for investment, net, at amortized cost1,331,079 1,308,654 
Accrued interest receivableAccrued interest receivable4,699 4,587 Accrued interest receivable8,817 8,313 
Other assetsOther assets16,264 26,636 Other assets4 17,505 
Total assetsTotal assets$1,331,836 $1,330,708 Total assets$1,341,070 $1,339,374 
Debt obligations, netDebt obligations, net$1,055,402 $1,054,774 Debt obligations, net$1,059,593 $1,058,462 
Accrued expensesAccrued expenses1,007 1,218 Accrued expenses3,213 3,029 
Other liabilitiesOther liabilities64 65 Other liabilities65 65 
Total liabilitiesTotal liabilities1,056,473 1,056,057 Total liabilities1,062,871 1,061,556 
Net equity in VIEs (eliminated in consolidation)Net equity in VIEs (eliminated in consolidation)275,363 274,651 Net equity in VIEs (eliminated in consolidation)278,199 277,818 
Total equityTotal equity275,363 274,651 Total equity278,199 277,818 
Total liabilities and equityTotal liabilities and equity$1,331,836 $1,330,708 Total liabilities and equity$1,341,070 $1,339,374 

Refer to Note 7. Debt Obligations, Net - Collateralized Loan Obligations (“CLO”) Debt for further details.
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11.10. EQUITY STRUCTURE AND ACCOUNTS

Exchange for Class A Common Stock
We are a holding company and have no material assets other than our direct and indirect ownership of Series REIT limited partnership units (“Series REIT LP Units”) and Series TRS limited partnership units (“Series TRS LP Units,” and, collectively with Series REIT LP Units, “Series Units”) of LCFH. Series TRS LP Units are exchangeable for the same number of limited liability company interests of LC TRS I LLC (“LC TRS I Shares”), which is a limited liability company that is a TRS as well as a general partner of Series TRS. Pursuant to the Third Amended and Restated LLLP Agreement of LCFH, the Continuing LCFH Limited Partners may from time to time, subject to certain conditions, receive 1 share of the Company’s Class A common stock in exchange for (i) 1 share of the Company’s Class B common stock, (ii) 1 Series REIT LP Unit and (iii) either 1 Series TRS LP Unit or 1 TRS I LLC Share, subject to equitable adjustments for stock splits, stock dividends and reclassifications. As of September 30, 2020, all shares of Class B common stock, Series REIT LP Units and Series TRS LP Units have been exchanged for shares of Class A common stock and no Class B common stock is outstanding as of March 31, 2022. As of March 31, 2022, the Company held a 100% interest in LCFH.

Stock Repurchases

On August 4, 2021,July 27, 2022, the board of directors authorized the repurchase of $50.0 million of the Company’s Class A common stock from time to time without further approval. This authorization increased the remaining outstanding authorization per the October 30, 2014August 4, 2021 authorization from $35.0$39.5 million to $50.0 million. Stock repurchases by the Company are generally made for cash in open market transactions at prevailing market prices but may also be made in privately negotiated transactions or otherwise. The timing and amount of purchases are determined based upon prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. As of March 31, 2022,2023, the Company has a remaining amount available for repurchase of $43.5$44.5 million, which represents 2.9%3.7% in the aggregate of its outstanding Class A common stock, based on the closing price of $11.87$9.45 per share on such date.

The following table is a summary oftables summarize the Company’s repurchase activity of its Class A common stock during the three months ended March 31, 20222023 and 20212022 ($ in thousands):
SharesAmount(1)
Authorizations remaining as of December 31, 2021$44,122 
Repurchases paid55,000 (611)
Repurchases unsettled— 
Authorizations remaining as of March 31, 2022$43,511 
SharesAmount(1)
Authorizations remaining as of December 31, 2022$46,737 
Repurchases paid250,000 (2,285)
Authorizations remaining as of March 31, 2023$44,452 
(1)Amount excludes commissions paid associated with share repurchases.
SharesAmount(1)
Authorizations remaining as of December 31, 2020$38,102 
Additional authorizations— 
Repurchases paid20,000 (214)
Repurchases unsettled— 
Authorizations remaining as of March 31, 2021$37,888 
SharesAmount(1)
Authorizations remaining as of December 31, 2021$38,102 
Repurchases paid20,000 (214)
Authorizations remaining as of March 31, 2022$37,888 
(1)Amount excludes commissions paid associated with share repurchases.


Dividends


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The following table presents dividends declared (on a per share basis) of Class A common stock for the three months ended March 31, 20222023 and 2021:2022:
Declaration DateDividend per Share
March 15, 20222023$0.200.23 
Total$0.200.23 
March 15, 20212022$0.20 
Total$0.20 

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Changes in Accumulated Other Comprehensive Income (Loss)

The following table presents changes in accumulated other comprehensive income related to the cumulative difference between the fair market value and the amortized cost basis of securities classified as available for sale for the three months ended March 31, 20222023 and 20212022 ($ in thousands):
Accumulated Other Comprehensive Income (Loss)
December 31, 2022$(21,009)
Other comprehensive income (loss)3,485 
March 31, 2023$(17,524)
Accumulated Other Comprehensive Income (Loss)Accumulated Other Comprehensive Income (Loss) of Noncontrolling InterestsTotal Accumulated Other Comprehensive Income (Loss)
December 31, 2021$(4,112)$(2)$(4,114)
Other comprehensive income (loss)(6,641)— (6,641)
March 31, 2022$(10,753)$(2)$(10,755)
Accumulated Other Comprehensive Income (Loss)
December 31, 2021$(4,112)
Other comprehensive income (loss)(6,641)
March 31, 2022$(10,753)
Accumulated Other Comprehensive Income (Loss)Accumulated Other Comprehensive Income (Loss) of Noncontrolling InterestsTotal Accumulated Other Comprehensive Income (Loss)
December 31, 2020$(10,463)$(2)$(10,465)
Other comprehensive income (loss)6,849 — 6,849 
March 31, 2021$(3,614)$(2)$(3,616)


12.11. NONCONTROLLING INTERESTS

Noncontrolling Interests in Consolidated Joint Ventures

As of March 31, 2022,2023, the Company consolidates 5two ventures and in each, there are different noncontrolling investors, which own between 10.0% - 25.0% of such ventures. These ventures hold investments in a 40-building student housing portfolio in Isla Vista, CA with a book value of $80.4$79.5 million, 11 office buildings in Richmond, VA with a book value of $69.2 million,and a single-tenant office building in Oakland County, MI with a book value of $8.4 million, an apartment complex in Miami, FL with a book value of $37.4 million, and an apartment complex in Stillwater, OK with a book value of $18.0$8.7 million. The Company makes distributions and allocates income from these ventures to the noncontrolling interests in accordance with the terms of the respective governing agreements.




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13.12. EARNINGS PER SHARE
 
The Company’s net income (loss) and weighted average shares outstanding for the three months ended March 31, 20222023 and 20212022 consist of the following:
Three Months Ended March 31,Three Months Ended March 31,
($ in thousands except share amounts)($ in thousands except share amounts)20222021($ in thousands except share amounts)20232022
Basic and Diluted Net income (loss) available for Class A common shareholdersBasic and Diluted Net income (loss) available for Class A common shareholders$19,032 $192 Basic and Diluted Net income (loss) available for Class A common shareholders$22,408 $19,032 
Weighted average shares outstanding  
Weighted average shares outstanding:Weighted average shares outstanding:  
BasicBasic124,305,943 123,974,970 Basic124,493,132 124,305,943 
DilutedDiluted125,478,001 124,324,683 Diluted124,656,102 125,478,001 
 
The calculation of basic and diluted net income (loss) per share amounts for the three months ended March 31, 20222023 and 20212022 consist of the following:
Three Months Ended March 31,Three Months Ended March 31,
(In thousands except share and per share amounts)(1)(In thousands except share and per share amounts)(1)20222021(In thousands except share and per share amounts)(1)20232022
Basic Net Income (Loss) Per Share of Class A Common StockBasic Net Income (Loss) Per Share of Class A Common Stock  Basic Net Income (Loss) Per Share of Class A Common Stock  
Numerator:
Numerator:
  
Numerator:
  
Net income (loss) attributable to Class A common shareholdersNet income (loss) attributable to Class A common shareholders$19,032 $192 Net income (loss) attributable to Class A common shareholders$22,408 $19,032 
Denominator:
Denominator:
  
Denominator:
  
Weighted average number of shares of Class A common stock outstandingWeighted average number of shares of Class A common stock outstanding124,305,943 123,974,970 Weighted average number of shares of Class A common stock outstanding124,493,132 124,305,943 
Basic net income (loss) per share of Class A common stockBasic net income (loss) per share of Class A common stock$0.15 $— Basic net income (loss) per share of Class A common stock$0.18 $0.15 
Diluted Net Income (Loss) Per Share of Class A Common StockDiluted Net Income (Loss) Per Share of Class A Common Stock  Diluted Net Income (Loss) Per Share of Class A Common Stock
Numerator:Numerator:  Numerator:
Net income (loss) attributable to Class A common shareholdersNet income (loss) attributable to Class A common shareholders$19,032 $192 Net income (loss) attributable to Class A common shareholders$22,408 $19,032 
Diluted net income (loss) attributable to Class A common shareholdersDiluted net income (loss) attributable to Class A common shareholders19,032 192 Diluted net income (loss) attributable to Class A common shareholders22,408 19,032 
Denominator:Denominator:  Denominator:
Basic weighted average number of shares of Class A common stock outstandingBasic weighted average number of shares of Class A common stock outstanding124,305,943 123,974,970 Basic weighted average number of shares of Class A common stock outstanding124,493,132 124,305,943 
Add - dilutive effect of:Add - dilutive effect of:  Add - dilutive effect of:  
Incremental shares of unvested Class A restricted stock(1)Incremental shares of unvested Class A restricted stock(1)1,172,058 349,713 Incremental shares of unvested Class A restricted stock(1)162,970 1,172,058 
Diluted weighted average number of shares of Class A common stock outstanding125,478,001 124,324,683 
Diluted weighted average number of shares of Class A common stock outstanding (2)Diluted weighted average number of shares of Class A common stock outstanding (2)124,656,102 125,478,001 
Diluted net income (loss) per share of Class A common stockDiluted net income (loss) per share of Class A common stock$0.15 $— Diluted net income (loss) per share of Class A common stock$0.18 $0.15 
(1)The Company is using the treasury stock method.
(2)There were 390,313 anti-dilutive shares as of March 31, 2023.



14.13. STOCK BASED AND OTHER COMPENSATION PLANS
 
Summary of Stock and Shares Unvested/Outstanding

The following table summarizes the impact on the consolidated statements of income of the various stock basedstock-based compensation plans and other compensation plans ($ in thousands):
Three Months Ended March 31,
20222021
Stock Based Compensation Expense$20,412 $5,276 
Phantom Equity Investment Plan— 22 
Total Stock Based Compensation Expense(1)$20,412 $5,298 
Three Months Ended March 31,
20232022
Stock-based compensation expense$9,124 $20,412 
Total Stock Based Compensation Expense(1)$9,124 $20,412 
(1)Variance between the three months ended March 31, 20222023 and March 31, 20212022 is primarily due to timing of the 2022 and 2021 and 2022grants of employee stock and bonusstock-based compensation. The majority of the stock and bonus compensation for the 2020 compensation year was granted in December of 2020, and stock and bonus compensation for the 2021 compensation year was granted during the three months ended March 31, 2022.
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A summary of the grants is presented below:
 Three Months Ended March 31,
 20222021
Number
of Shares		Weighted
Average
Fair Value
Per Share		Number
of Shares		Weighted
Average
Fair Value
Per Share
Grants - Class A Common Stock2,843,340 $11.89 747,713 $9.81 
 Three Months Ended March 31,
 20232022
Number
of Shares/Options		Weighted
Average
Fair Value
Per Share		Number
of Shares		Weighted
Average
Fair Value
Per Share
Grants - Class A Common Stock1,417,561 $11.58 2,843,340 $11.89 

The table below presents the number of unvested shares of Class A common stock and outstanding stock options at March 31, 20222023 and changes during 20222023 of the Class A common stock and stock options of Ladder Capital Corp granted under the 2014 Omnibus Incentive Plan:
Restricted StockStock Options
Nonvested/Outstanding at December 31, 20212,145,380 623,788 
Granted2,843,340 — 
Vested(2,394,618)— 
Forfeited(66,026)— 
Expired— — 
Nonvested/Outstanding at March 31, 20222,528,076 623,788 
Exercisable at March 31, 2022 (1)623,788 
Restricted StockWeighted Average Grant Date Fair ValueStock Options
Nonvested/Outstanding at December 31, 20222,529,571 $12.62 623,788 
Granted1,417,561 11.58 — 
Vested(1,697,350)12.14 — 
Forfeited(32,446)10.32 — 
Nonvested/Outstanding at March 31, 20232,217,336 $12.36 623,788 
Exercisable at March 31, 2023 (1)623,788 
(1)The weighted-averageweighted average exercise price of outstanding options warrants and rights is $14.84 at March 31, 2022.2023.

At March 31, 20222023, there was $23.6$19.2 million of total unrecognized compensation cost related to certain share-based compensation awards that is expected to be recognized over a period of up to 28.735.0 months, with a weighted-averageweighted average remaining vesting period of 3626.6 months.

2014 Omnibus Incentive Plan
 
In connection with the IPO Transactions, the 2014 Ladder Capital Corp Omnibus Incentive Equity Plan (the “2014 Omnibus Incentive Plan”) was adopted by the board of directors on February 11, 2014, and provides certain members of management, employees and directors of the Company or its affiliates with additional incentives including grants of stock options, stock appreciation rights, restricted stock, other stock-based awards and other cash-based awards.

Annual Incentive Awards Granted in 2023 with respect to 2022 Performance

For 2022 performance, certain employees received stock-based incentive equity in February 2023. Restricted stock subject to time-based vesting criteria will vest in three installments on February 18 of each of 2024, 2025 and 2026, subject to continued employment on the applicable vesting dates. The Company has elected to recognize the compensation expense related to the time-based vesting of the annual restricted stock awards for the entire award on a straight-line basis over the requisite service period for the entire award. Restricted stock subject to performance criteria is eligible to vest in three equal installments upon the compensation committee’s confirmation that the Company achieves a pre-tax return on average equity, based on distributable earnings divided by the Company’s average shareholders’ equity, equal to or greater than 8% for such year (the “Performance Target”) for the years ended December 31, 2023, 2024 and 2025, respectively. If the Company misses the Performance Target during either the first or second calendar year but meets the Performance Target for a subsequent year during the three-year performance period and the Company’s return on equity for such subsequent year and any years for which it missed its Performance Target equals or exceeds the compounded pre-tax return on average equity of 8% based on distributable earnings divided by the Company’s average shareholders’ equity, the performance-vesting restricted stock which failed to vest because the Company previously missed its Performance Target will vest subject to continued employment on the applicable vesting date (the “Catch-Up Provision”). Approximately 2/3 of all the shares subject to attainment of the Performance Target are also subject to the Catch-Up Provision, as the Catch-Up Provision is not available for the missed performance during the third performance year and has the effect of requiring the Company to achieve an average 8% return over the full three-year performance plan in order to be effective. Accruals of compensation cost for an award with a performance condition shall be based on the probable outcome of that performance condition. Therefore, compensation cost shall be accrued if it is probable that the performance condition will be achieved and shall not be accrued if it is not probable that the performance condition will be achieved. The probability of meeting the performance outcome is assessed quarterly.
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On February 18, 2023, in connection with 2022 performance, annual stock awards were granted to management employees (each, a “Management Grantee”), with an aggregate grant date fair value of $8.5 million, which represents 733,607 shares of Class A common stock. The grant to Mr. Harris and approximately half of the grants to each of Ms. McCormack and Mr. Perelman were unrestricted. The other half of incentive equity granted to each of Ms. McCormack and Mr. Perelman is restricted stock subject to attainment of the Performance Target for the applicable years and is also subject to the Catch-Up Provision described above. For the grants to Mr. Miceli and Ms. Porcella (a total of 101,344 shares with an aggregate fair value of $1.2 million), approximately half of the awards are subject to time-based vesting criteria and the remaining half are subject to attainment of the Performance Target for the applicable years.

On February 18, 2023, in connection with 2022 performance, annual stock awards were granted to certain non-management employees (“Non-Management Grantees”) with an aggregate grant date fair value of $7.5 million, which represents 651,429 shares of Class A common stock. Of these awards, 19,558 shares were unrestricted, 306,162 shares are subject to time-based vesting criteria and the remaining 325,709 shares are subject to the attainment of the Performance Target, including the Catch-Up Provision, for the applicable years.

Other 2023 Restricted Stock Awards

On February 18, 2023, certain members of the board of directors received annual restricted stock awards with a grant date fair value of $0.4 million, representing 32,525 shares of restricted Class A common stock, which will vest in full on the first anniversary of the date of grant, subject to continued service on the board of directors. Compensation expense related to the time-based vesting criteria of the award shall be recognized on a straight-line basis over the one-year vesting period.

Annual Incentive Awards Granted in 2022 with respect to 2021 Performance

For 2021 performance, certain employees received stock-based incentive equity in January 2022. Fair value for all restricted and unrestricted stock grants was calculated using the average closing stock price for the five business days prior to the grant date. Restricted stock subject to time-based vesting criteria will vest in 3three installments on February 18 of each of 2023, 2024 and 2025, subject to continued employment on the applicable vesting dates. The Company has elected to recognize the compensation expense related to the time-based vesting of the annual restricted stock awards for the entire award on a straight-line basis over the requisite service period for the entire award. Restricted stock subject to performance criteria is eligible to vest in 3three equal installments upon the compensation committee’s confirmation that the Company achieves a return on equity, based on distributable earnings divided by the Company’s average book value of equity, equal to or greater than 8% for such year (the “Performance Target”)Performance Target for the years ended December 31, 2022, 2023 and 2024, respectively. IfApproximately 2/3 of all the Company missesshares subject to attainment of the Performance Target during either the first or second calendar year but meets the Performance Target for a subsequent year during the three year performance period and the Company’s return on equity for such subsequent year and any years for which it missed its Performance Target equals or exceeds the compounded return on equity of 8% based on distributable earnings divided by the Company’s average book value of equity, the performance-vesting restricted stock which failed to vest because the Company previously missed its Performance Target will vestare also subject to continued employment on the applicable vesting date (the “Catch-Up Provision”).Catch-Up Provision. Accruals of compensation cost for an award with a performance condition shall be based on the probable outcome of that performance condition. Therefore, compensation cost shall be accrued if it is probable that the performance condition will be achieved and shall not be accrued if it is not probable that the performance condition will be achieved. The probability of meeting the performance outcome is assessed quarterly.

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On January 31, 2022, in connection with 2021 compensation,performance, annual stock awards were granted to management employees (each, a “Management Grantee”), with an aggregate grant date fair value of $18 million, which represents 1,517,627 shares of Class A common stock. The grant to Mr. Harris and approximately 2/3 of the grants to each of Ms. McCormack and Mr. Perelman were unrestricted. The other 1/3 of incentive equity granted to each of Ms. McCormack and Mr. Perelman is restricted stock subject to attainment of the Performance Target for the applicable years and is also subject to the Catch-Up Provision described above. TheFor the grants to Mr. Miceli and Ms. Porcella (a total of 210,662 shares with an aggregate fair value of $2.5 million) are subject to the same time-based and performance-based vesting described below for Non-Management Grantees.

On January 31, 2022, in connection with 2021 compensation, annual stock awards were granted to certain non-management employees (“Non-Management Grantees”) with an aggregate fair value of $15.4 million, which represents 1,293,853 shares of Class A common stock. For the awards granted to Mr. Miceli, Ms. Porcella and certain Non-Management Grantees (a total of 1,254,085 shares), approximately 1/3 of the awards were unrestricted, with another 1/3 of the awards subject to time-based vesting criteria, and the remaining 1/3 subject to attainment of the Performance Target for the applicable years. The 1/3

On January 31, 2022, in connection with 2021 performance, annual stock awards were granted to certain non-management employees (“Non-Management Grantees”) with an aggregate grant date fair value of $15.4 million, which represents 1,293,853 shares of Class A common stock. Of these awards, 264,704 shares were unrestricted, 497,169 shares are subject to time-based vesting criteria, and the remaining 531,980 shares are subject to attainment of the Performance Target, is also subject toincluding the Catch-Up Provision. ForProvision, for the awards granted to other Non-Management Grantees (a total applicable years.


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Other Incentive Awards Granted in 2022

On May 10, 2022, a new employee of the awardsCompany received a restricted stock award with a grant date fair value of $0.4 million, representing 33,784 shares of restricted Class A common stock. Fifty percent of the restricted stock award is subject to time-based vesting criteria, and the remaining 1/250% of the restricted stock award is subject to attainment of the Performance Target for the applicable years. The 1/2 of awards subject to attainment of the Performance Target is also subject to the Catch-Up Provision.

Annual Incentive Awards Granted in 2021 with Respect to 2020 Performance

On January 1, 2021, in connection with 2020 compensation, annual stock awards were granted to non-management employees (“Non-Management Grantees”) with an aggregate fair value of $7.0 million, which represents 711,653 shares of Class A common stock. Approximately one-third of the awards to Non-Management Grantees were unrestricted, with another one-third of the awards subject to time-based vesting criteria, and the remaining one-third subject to attainment of the Performance Target for the applicable years. The one-third of awards subject to attainment of the Performance Target is also subject to the Catch-Up Provision and the Performance Waiver, defined below. The time-vesting restricted stock will vest in 3three installments on February 18 of each of 2022, 2023, 2024 and 2024,2025, subject to continued employment on the applicable vesting dates. Fair valueThe performance-vesting restricted stock will vest in three equal installments upon the Compensation Committee’s confirmation that the Company achieves the Performance Target for all restrictedthe years ended December 31, 2022, 2023 and unrestricted stock grants was calculated using the most recent closing stock price prior2024, respectively. The Catch-Up Provision applies to the grant date (due to markets being closed on the grant date). Compensation expense for unrestricted stock grants was expensed immediately.performance vesting portion of this award, provided that a termination has not occurred. The Company has elected to recognize the compensation expense related to the time-based vesting criteria of the annual restricted stock awards for the entire awardthese Restricted Stock Awards on a straight-line basis over the requisite service period for the entire award. Accruals of compensation cost for an award with a performance condition shall be based on the probable outcome of that performance condition. Therefore, compensation cost shall be accrued if it is probable that the performance condition will be achieved and shall not be accrued if it is not probable that the performance condition will be achieved. The probability of meeting the performance outcome is assessed quarterly. On May 27, 2020, the compensation committee of the board of directors used its discretion to waive the Performance Target for shares eligible to vest based on the Company’s performance in 2020 and 2021, subject to continued employment on the applicable vesting dates (the “Performance Waiver”). The Performance Waiver was made in recognition of the actions taken by Ladder’s employees in response to COVID-19 that, while in the best interests of the Company and its shareholders, would not produce earnings consistent with the Performance Target in their deferred compensation arrangements. Such actions included maintaining high levels of unrestricted cash liquidity and refinancing debt with more expensive non-mark-to-market funding sources. In the first quarter, the 2021 Performance Waiver applied to 39 Ladder employees.period.

Other 2022 Restricted Stock Awards

On February 18, 2022, certain members of the board of directors each received annual restricted stock awards with a grant date fair value of $0.4 million, representing 31,860 shares of restricted Class A common stock, which will vest in full on the first anniversary of the date of grant, subject to continued service on the board of directors. Compensation expense related to the time-based vesting criteria of the award shall be recognized on a straight-line basis over the one-year vesting period.

Change in Control

Upon a change in control (as defined in the respective award agreements), restricted stock awards to Mr. Miceli, Ms. McCormack, and Mr. Perelman, and one Non-Management Grantee will become fully vested ifif: (1) such Management Grantee continues to be employed through the closing of the change in controlcontrol; or (2) after the signing of definitive documentation related to the change in control, but prior to its closing, such Management Grantee’s employment is terminated without cause or due to death or disability or the Management Grantee resigns for Good Reason, as defined in each Management Grantee’s employment agreement. The compensation committee retains the right, in its sole discretion, to provide for the accelerated vesting (in whole or in part) of the restricted stock awards granted.

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In the event Ms. Porcella or a Non-Management Grantee, except for the one mentioned above, is terminated by the Company without cause within six months of certain changes in control, all unvested time shares shall vest on the termination date and all unvested performance shares shall remain outstanding and be eligible to vest (or be forfeited) in accordance with the performance conditions.

Bonus Payments
For the three months ended March 31, 2022, total bonus compensation was $5.2 million.

During the year ended December 31, 2021, the Company recorded $11.0 million of compensation expense related to cash bonuses that were paid in January 2022. For the three months ended March 31, 2021, the Company paid $1.1 million compensation expense related to bonuses accrued for during the year ended December 31, 2020.



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15.14. FAIR VALUE OF FINANCIAL INSTRUMENTS
 
Fair value is based upon internal models, using market quotations, broker quotations, counterparty quotations or pricing services quotations, which provide valuation estimates based upon reasonable market order indications and are subject to significant variability based on market conditions, such as interest rates, credit spreads and market liquidity. The fair value of the mortgage loan receivables held for sale is based upon a securitization model utilizing market data from recent securitization spreads and pricing.
 
Fair Value Summary Table
 
The carrying values and estimated fair values of the Company’s financial instruments, which are both reported at fair value on a recurring basis (as indicated) or amortized cost/par, at March 31, 20222023 and December 31, 20212022 are as follows ($ in thousands):
 
March 31, 2022
      Weighted Average
 Principal Amount Amortized Cost Basis/Purchase PriceFair ValueFair Value MethodYield
%		Remaining
Maturity/Duration (years)
Assets:       
CMBS(1)$659,685  $659,097 $648,042 Internal model, third-party inputs1.90 %1.81
CMBS interest-only(1)1,287,812 (2)13,952 14,253 Internal model, third-party inputs4.57 %1.76
GNMA interest-only(3)54,895 (2)407 451 Internal model, third-party inputs5.29 %3.55
Agency securities(1)52  53 53 Internal model, third-party inputs2.78 %1.92
Equity securities(3) N/A148 162 Observable market pricesN/A N/A
Provision for current expected credit reserves N/A(20)(20)(5)N/AN/A
Mortgage loan receivables held for investment, net, at amortized cost(4)3,887,434  3,857,464 3,797,372 Discounted Cash Flow(5)5.45 %1.68
Mortgage loan receivables held for sale54,850  53,901 53,901 Internal model, third-party inputs(6)4.44 %9.91
FHLB stock(6)11,835  11,835 11,835 (6)3.00 % N/A
Nonhedge derivatives(1)(7)124,250  234 234 Counterparty quotationsN/A0.76
Liabilities:       
Repurchase agreements - short-term621,745  621,745 621,745 Discounted Cash Flow(8)1.34 %0.54
Repurchase agreements - long-term12,962  12,962 12,962 Discounted Cash Flow(9)0.93 %1.15
Mortgage loan financing646,126  648,666 662,672 Discounted Cash Flow4.85 %3.0
Secured financing facility110,185 109,630 107,883 Discounted Cash Flow(8)9.91 %1.10
CLO debt1,064,365 1,055,402 1,055,402 Discounted Cash Flow(9)2.14 %16.68
Borrowings from the FHLB263,000  263,000 263,303 Discounted Cash Flow0.96 %1.71
Senior unsecured notes1,649,794  1,631,905 1,589,787 Internal model, third-party inputs4.66 %5.50
2023
      Weighted Average
 Principal Amount Amortized Cost Basis/Purchase PriceFair ValueFair Value MethodYield
%		Remaining
Maturity/Duration (years)
Assets:       
CMBS(1)$503,183  $502,710 $485,191 Internal model, third-party inputs5.76 %1.01
CMBS interest-only(1)898,620 (2)9,493 9,537 Internal model, third-party inputs3.82 %1.37
GNMA interest-only(3)44,966 (2)265 385 Internal model, third-party inputs5.95 %3.09
Agency securities(1)32  33 31 Internal model, third-party inputs2.70 %1.42
U.S. Treasury securities(1)25,000 24,772 24,772 Internal model, third-party inputs4.10 %0.29
Equity securities(3) N/A160 113 Observable market pricesN/A N/A
Mortgage loan receivables held for investment, net, at amortized cost(4)3,809,591  3,794,075 3,306,791 Discounted Cash Flow(5)9.18 %1.07
Mortgage loan receivables held for sale31,350  27,197 27,197 Internal model, third-party inputs(6)4.57 %8.94
FHLB stock(7)9,585  9,585 9,585 (7)4.75 % N/A
Nonhedge derivatives(1)(10)106,408  1,421 1,421 Counterparty quotationsN/A1.42
Liabilities:       
Repurchase agreements - short-term402,869  402,869 402,869 Cost plus Accrued Interest (8)5.76 %0.53
Repurchase agreements - long-term366,398  366,398 366,398 Discounted Cash Flow(9)5.77 %2.31
Mortgage loan financing469,121  469,690 453,300 Discounted Cash Flow5.68 %3.31
CLO debt1,064,365 1,059,593 1,059,593 Discounted Cash Flow(9)7.00 %15.68
Borrowings from the FHLB213,000  213,000 212,911 Discounted Cash Flow1.21 %1.00
Senior unsecured notes1,585,063  1,570,878 1,244,020 Internal model, third-party inputs4.66 %4.53
(1)Measured at fair value on a recurring basis with the net unrealized gains or losses recorded as a component of other comprehensive income (loss) in equity.
(2)Represents notional outstanding balance of underlying collateral.
(3)Measured at fair value on a recurring basis with the net unrealized gains or losses recorded in current period earnings.
(4)Balance does not include impact of allowance for current expected credit losses of $32.3$25.5 million at March 31, 2023.
(5)Fair value for floating rate mortgage loan receivables, held for investment is estimated to approximate the outstanding face amount given the short interest rate reset risk (30 days) and no significant change in credit risk. Fair value for fixed rate mortgage loan receivables, held for investment is measured using a discounted cash flow model.
(6)Fair value for mortgage loan receivables, held for sale is measured using a hypothetical securitization model utilizing market data from recent securitization spreads and pricing.
(7)Fair value of the FHLB stock approximates outstanding face amount as the Company’s captive insurance subsidiary is restricted from trading the stock and can only put the stock back to the FHLB, at the FHLB’s discretion, at par.
(8)For repurchase agreements - short term, the value approximates the cost plus accrued interest.
(9)For repurchase agreements - long term and CLO debt, the carrying value approximates the fair value discounting the expected cash flows at current market rates. If the collateral is determined to be impaired, the related financing would be revalued accordingly. There are no impairments on any positions.
(10)The outstanding face amount of the nonhedge derivatives represents the notional amount of the underlying contracts.






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December 31, 2022
      Weighted Average
 Principal Amount Amortized Cost Basis/Purchase PriceFair ValueFair Value MethodYield
%		Remaining
Maturity/Duration (years)
Assets:       
CMBS(1)$562,839 $562,246 $541,333 Internal model, third-party inputs5.32 %1.06
CMBS interest-only(1)1,026,195 (2)10,498 10,443 Internal model, third-party inputs3.65 %1.45
GNMA interest-only(3)45,369 (2)285 281 Internal model, third-party inputs4.23 %3.30
Agency securities(1)36 36 35 Internal model, third-party inputs2.70 %1.54
U.S. Treasury securities(1)36,000 35,328 35,328 Internal model, third-party inputs4.17 %0.60
Equity securities(3)N/A160 118 Observable market pricesN/AN/A
Mortgage loan receivables held for investment, net, at amortized cost(4)3,907,295 3,885,746 3,875,708 Discounted Cash Flow(5)8.85 %1.26
Mortgage loan receivables held for sale31,350 27,391 27,391 Internal model, third-party inputs(6)4.57 %9.19
FHLB stock(7)9,585 9,585 9,585 (7)4.75 %N/A
Nonhedge derivatives(1)(10)204,700 2,038 2,038 Counterparty quotationsN/A1.52
Liabilities:       
Repurchase agreements - short-term481,465 481,465 481,465 Cost plus Accrued Interest (8)4.04 %0.37
Repurchase agreements - long-term366,398 366,398 366,398 Discounted Cash Flow(9)4.06 %2.56
Mortgage loan financing497,454 497,991 477,101 Discounted Cash Flow5.51 %3.36
CLO debt1,064,365 1,058,462 1,058,462 Discounted Cash Flow(9)6.35 %15.92
Borrowings from the FHLB213,000 213,000 213,055 Discounted Cash Flow1.61 %1.25
Senior unsecured notes1,643,794 1,628,382 1,397,977 Internal model, third-party inputs4.66 %4.75
(1)Measured at fair value on a recurring basis with the net unrealized gains or losses recorded as a component of other comprehensive income (loss) in equity.
(2)Represents notional outstanding balance of underlying collateral.
(3)Measured at fair value on a recurring basis with the net unrealized gains or losses recorded in current period earnings.
(4)Balance does not include impact of allowance for current expected credit losses of $20.8 million at December 31, 2022.
(5)Fair value for floating rate mortgage loan receivables, held for investment is estimated to approximate the outstanding face amount given the short interest rate reset risk (30 days) and no significant change in credit risk. Fair value for fixed rate mortgage loan receivables, held for investment is measured using a discounted cash flow model.
(6)Fair value of the FHLB stock approximates outstanding face amount as the Company’s captive insurance subsidiary is restricted from trading the stock and can only put the stock back to the FHLB, at the FHLB’s discretion, at par.
(7)The outstanding face amount of the nonhedge derivatives represents the notional amount of the underlying contracts.
(8)Fair value for repurchase agreement liabilities - short term borrowings under the Secured Financing Facility and borrowings under the Revolving Credit Facility is estimated to approximate carrying amount primarily due to the short interest rate reset risk (30 days) of the financings and the high credit quality of the assets collateralizing these positions. If the collateral is determined to be impaired, the related financing would be revalued accordingly. There are no impairments on any positions.
(9)For repurchase agreements - long term and CLO debt, the carrying value approximates the fair value discounting the expected cash flows at current market rates. If the collateral is determined to be impaired, the related financing would be revalued accordingly. There are no impairments on any positions.




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December 31, 2021
      Weighted Average
 Principal Amount Amortized Cost Basis/Purchase PriceFair ValueFair Value MethodYield
%		Remaining
Maturity/Duration (years)
Assets:       
CMBS(1)$691,402  $691,026 $686,293 Internal model, third-party inputs1.57 %2.06
CMBS interest-only(1)1,302,551 (2)15,268 15,885 Internal model, third-party inputs5.67 %1.88
GNMA interest-only(3)59,075 (2)518 559 Internal model, third-party inputs4.97 %3.64
Agency securities(1)557  560 563 Internal model, third-party inputs1.58 %0.69
Mortgage loan receivables held for investment, net, at amortized cost(4)3,581,919  3,553,737 3,494,254 Discounted Cash Flow(5)5.65 %1.76
FHLB stock(6)11,835  11,835 11,835 (6)3.25 % N/A
Nonhedge derivatives(1)(7)114,121  402 402 Counterparty quotationsN/A0.30
Liabilities:       
Repurchase agreements - short-term418,394  418,394 418,394 Discounted Cash Flow(8)0.89 %0.46
Repurchase agreements - long-term26,183  26,183 26,183 Discounted Cash Flow(9)2.21 %1.01
Mortgage loan financing690,927  693,797 709,695 Discounted Cash Flow4.83 %3.3
Secured financing facility136,444 132,447 133,389 Discounted Cash Flow(8)10.75 %1.35
CLO debt1,064,365 1,054,774 1,054,774 Discounted Cash Flow(9)2.04 %16.92
Borrowings from the FHLB263,000  263,000 263,414 Discounted Cash Flow0.91 %1.95
Senior unsecured notes1,649,794  1,631,108 1,677,039 Internal model, third-party inputs4.66 %5.74
(1)Measured at fair value on a recurring basis with the net unrealized gains or losses recorded as a component of other comprehensive income (loss) in equity.
(2)Represents notional outstanding balance of underlying collateral.
(3)Measured at fair value on a recurring basis with the net unrealized gains or losses recorded in current period earnings.
(4)Balance does not include impact of allowance for current expected credit losses of $31.8 million at December 31, 2021.
(5)Fair value for floating rate mortgage loan receivables, held for investment is estimated to approximate the outstanding face amount given the short interest rate reset risk (30 days) and no significant change in credit risk. Fair value for fixed rate mortgage loan receivables, held for investment is measured using a discounted cash flow model.
(6)Fair value of the FHLB stock approximates outstanding face amount as the Company’s captive insurance subsidiary is restricted from trading the stock and can only put the stock back to the FHLB, at the FHLB’s discretion, at par.
(7)(10)The outstanding face amount of the nonhedge derivatives represents the notional amount of the underlying contracts.
(8)Fair value for repurchase agreement liabilities - short term borrowings under the Secured Financing Facility and borrowings under the Revolving Credit Facility is estimated to approximate carrying amount primarily due to the short interest rate reset risk (30 days) of the financings and the high credit quality of the assets collateralizing these positions. If the collateral is determined to be impaired, the related financing would be revalued accordingly. There are no impairments on any positions.
(9)For repurchase agreements - long term and CLO debt, the carrying value approximates the fair value discounting the expected cash flows at current market rates. If the collateral is determined to be impaired, the related financing would be revalued accordingly. There are no impairments on any positions.

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The following table summarizes the Company’s financial assets and liabilities, which are both reported at fair value on a recurring basis (as indicated) or amortized cost/par, at March 31, 20222023 and December 31, 20212022 ($ in thousands):
 
March 31, 20222023
 
Financial Instruments Reported at Fair Value on Consolidated Statements of Financial ConditionFinancial Instruments Reported at Fair Value on Consolidated Statements of Financial ConditionPrincipal
Amount		 Fair ValueFinancial Instruments Reported at Fair Value on Consolidated Statements of Financial ConditionPrincipal
Amount		 Fair Value
Level 1Level 2Level 3Total Level 1Level 2Level 3Total
Assets:Assets:      Assets:      
CMBS(1)CMBS(1)$649,626  $— $— $638,403 $638,403 CMBS(1)$493,802  $— $— $476,181 $476,181 
CMBS interest-only(1)CMBS interest-only(1)1,278,708 (2)— — 13,743 13,743 CMBS interest-only(1)890,193 (2)— — 9,150 9,150 
GNMA interest-only(3)GNMA interest-only(3)54,895 (2)— — 451 451 GNMA interest-only(3)44,966 (2)— — 385 385 
Agency securities(1)Agency securities(1)52  — — 53 53 Agency securities(1)32  — — 31 31 
U.S. Treasury securitiesU.S. Treasury securities25,000 24,772 — — 24,772 
Equity securitiesEquity securities N/A162 — — 162 Equity securities N/A113 — — 113 
Nonhedge derivatives(4)Nonhedge derivatives(4)124,250  — 234 — 234 Nonhedge derivatives(4)106,408 — 1,421 — 1,421 
$24,885 $1,421 $485,747 $512,053 
$162 $234 $652,650 $653,046 
Financial Instruments Not Reported at Fair Value on Consolidated Statements of Financial ConditionFinancial Instruments Not Reported at Fair Value on Consolidated Statements of Financial ConditionPrincipal
Amount		 Fair ValueFinancial Instruments Not Reported at Fair Value on Consolidated Statements of Financial ConditionPrincipal
Amount		 Fair Value
Level 1Level 2Level 3Total Level 1Level 2Level 3Total
Assets:Assets:Assets:
Mortgage loan receivable held for investment, net, at amortized cost:Mortgage loan receivable held for investment, net, at amortized cost:Mortgage loan receivable held for investment, net, at amortized cost:
Mortgage loan receivables held for investment, net, at amortized cost(5)Mortgage loan receivables held for investment, net, at amortized cost(5)$3,887,434  $— $— $3,797,372 $3,797,372 Mortgage loan receivables held for investment, net, at amortized cost(5)$3,809,591  $— $— $3,306,791 $3,306,791 
Mortgage loan receivable held for sale(7)54,850  — — 53,901 53,901 
CMBS(6)10,059 — — 9,639 9,639 
CMBS interest-only(6)9,104 — — 509 509 
Mortgage loan receivable held for sale(6)Mortgage loan receivable held for sale(6)31,350  — — 27,197 27,197 
CMBS(7)CMBS(7)9,381 — — 9,009 9,009 
CMBS interest-only(7)CMBS interest-only(7)8,426 — — 387 387 
FHLB stockFHLB stock11,835  — — 11,835 11,835 FHLB stock9,585  — — 9,585 9,585 
$— $— $3,873,256 $3,873,256 $— $— $3,352,969 $3,352,969 
Liabilities:Liabilities:     Liabilities:     
Repurchase agreements - short-termRepurchase agreements - short-term621,745  $— $— $621,745 $621,745 Repurchase agreements - short-term$402,869  $— $— $402,869 $402,869 
Repurchase agreements - long-termRepurchase agreements - long-term12,962  — — 12,962 12,962 Repurchase agreements - long-term366,398  — — 366,398 366,398 
Mortgage loan financingMortgage loan financing646,126  — — 662,672 662,672 Mortgage loan financing469,121  — — 453,300 453,300 
Secured financing facility110,185 — — 107,883 107,883 
CLO debtCLO debt1,064,365 — — 1,055,402 1,055,402 CLO debt1,064,365 — — 1,059,593 1,059,593 
Borrowings from the FHLBBorrowings from the FHLB263,000  — — 263,303 263,303 Borrowings from the FHLB213,000  — — 212,911 212,911 
Senior unsecured notesSenior unsecured notes1,649,794  — — 1,589,787 1,589,787 Senior unsecured notes1,585,063  — — 1,244,020 1,244,020 
$— $— $4,313,754 $4,313,754 $— $— $3,739,091 $3,739,091 
(1)Measured at fair value on a recurring basis with the net unrealized gains or losses recorded as a component of other comprehensive income (loss) in equity. 
(2)Represents notional outstanding balance of underlying collateral. 
(3)Measured at fair value on a recurring basis with the net unrealized gains or losses recorded in current period earnings. 
(4)Measured at fair value on a recurring basis with the net unrealized gains or losses recorded in current period earnings.  The outstanding face amount of the nonhedge derivatives represents the notional amount of the underlying contracts.
(5)Balance does not include impact of allowance for current expected credit losses of $32.3$25.5 million at March 31, 2022.2023.
(6)A lower of cost or market adjustment was recorded as of March 31, 2023.
(7)Restricted securities which are designated as risk retention securities under the Dodd-Frank Act and are therefore subject to transfer restrictions over the term of the securitization trust, which are classified as held-to-maturity and reported at amortized cost.
(7)A lower of cost or market adjustment was recorded as of March 31, 2022.

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December 31, 20212022
Financial Instruments Reported at Fair Value on Consolidated Statements of Financial ConditionFinancial Instruments Reported at Fair Value on Consolidated Statements of Financial ConditionPrincipal
Amount		 Fair ValueFinancial Instruments Reported at Fair Value on Consolidated Statements of Financial ConditionPrincipal
Amount		 Fair Value
Level 1Level 2Level 3Total Level 1Level 2Level 3Total
Assets:Assets:      Assets:      
CMBS(1)CMBS(1)$681,076  $— $— $676,398 $676,398 CMBS(1)$553,424 $— $— $532,304 $532,304 
CMBS interest-only(1)CMBS interest-only(1)1,293,181 (2)— — 15,344 15,344 CMBS interest-only(1)1,017,735 (2)— — 10,026 10,026 
GNMA interest-only(3)GNMA interest-only(3)59,075 (2)— — 559 559 GNMA interest-only(3)45,369 (2)— — 281 281 
Agency securities(1)Agency securities(1)557  — — 563 563 Agency securities(1)36 — — 35 35 
Equity securitiesEquity securitiesN/A118 — — 118 
U.S. Treasury securitiesU.S. Treasury securities36,000 35,328 — — 35,328 
Nonhedge derivatives(4)Nonhedge derivatives(4)114,121  — 402 — 402 Nonhedge derivatives(4)204,700 — 2,038 — 2,038 
$— $402 $692,864 $693,266 $35,446 $2,038 $542,646 $580,130 
Financial Instruments Not Reported at Fair Value on Consolidated Statements of Financial ConditionFinancial Instruments Not Reported at Fair Value on Consolidated Statements of Financial ConditionPrincipal
Amount		 Fair ValueFinancial Instruments Not Reported at Fair Value on Consolidated Statements of Financial ConditionPrincipal
Amount		 Fair Value
Level 1Level 2Level 3Total Level 1Level 2Level 3Total
Assets:Assets:Assets:
Mortgage loan receivable held for investment, net, at amortized cost:Mortgage loan receivable held for investment, net, at amortized cost:Mortgage loan receivable held for investment, net, at amortized cost:
Mortgage loan receivables held for investment, net, at amortized cost(5)Mortgage loan receivables held for investment, net, at amortized cost(5)$3,581,920  $— $— $3,494,254 $3,494,254 Mortgage loan receivables held for investment, net, at amortized cost(5)$3,907,295 $— $— $3,875,708 $3,875,708 
CMBS(6)10,326 — — 9,894 9,894 
CMBS interest-only(6)9,370 — — 541 541 
Mortgage loan receivable held for sale(6)Mortgage loan receivable held for sale(6)31,350 — — 27,391 27,391 
CMBS(7)CMBS(7)9,415 — — 9,030 9,030 
CMBS interest-only(7)CMBS interest-only(7)8,460 — — 417 417 
FHLB stockFHLB stock11,835  — — 11,835 11,835 FHLB stock9,585 — — 9,585 9,585 
$— $— $3,516,524 $3,516,524 $— $— $3,922,131 $3,922,131 
Liabilities:Liabilities:     Liabilities:     
Repurchase agreements - short-termRepurchase agreements - short-term418,394  $— $— $418,394 $418,394 Repurchase agreements - short-term$481,465 $— $— $481,465 $481,465 
Repurchase agreements - long-termRepurchase agreements - long-term26,183  — — 26,183 26,183 Repurchase agreements - long-term366,398 — — 366,398 366,398 
Mortgage loan financingMortgage loan financing690,927  — — 709,695 709,695 Mortgage loan financing497,454 — — 477,101 477,101 
Secured financing facility136,444 — — 133,389 133,389 
CLO debtCLO debt1,064,365 — — 1,054,774 1,054,774 CLO debt1,064,365 — — 1,058,462 1,058,462 
Borrowings from the FHLBBorrowings from the FHLB263,000  — — 263,414 263,414 Borrowings from the FHLB213,000 — — 213,055 213,055 
Senior unsecured notesSenior unsecured notes1,649,794  — — 1,677,039 1,677,039 Senior unsecured notes1,643,794 — — 1,397,977 1,397,977 
$— $— $4,282,888 $4,282,888 $— $— $3,994,458 $3,994,458 
(1)Measured at fair value on a recurring basis with the net unrealized gains or losses recorded as a component of other comprehensive income (loss) in equity. 
(2)Represents notional outstanding balance of underlying collateral. 
(3)Measured at fair value on a recurring basis with the net unrealized gains or losses recorded in current period earnings. 
(4)Measured at fair value on a recurring basis with the net unrealized gains or losses recorded in current period earnings.  The outstanding face amount of the nonhedge derivatives represents the notional amount of the underlying contracts.
(5)Balance does not include impact of allowance for current expected credit losses of $31.8$20.8 million at December 31, 2021.
(6)A lower of cost or market adjustment was recorded as of December 31, 2022.
(7)Restricted securities which are designated as risk retention securities under the Dodd-Frank Act and are therefore subject to transfer restrictions over the term of the securitization trust, which are classified as held-to-maturity and reported at amortized cost.  


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The following table summarizes changes in Level 3 financial instruments reported at fair value on the consolidated statements of financial condition for the three months ended March 31, 20222023 and 20212022 ($ in thousands):
Three Months Ended March 31,Three Months Ended March 31,
Level 3Level 320222021Level 320232022
Balance at January 1,Balance at January 1,$692,864 $1,046,569 Balance at January 1,$542,646 $692,864 
Transfer from level 2Transfer from level 2— — Transfer from level 2— — 
PurchasesPurchases29,603 40,016 Purchases546 29,603 
SalesSales(4,261)(329,062)Sales(10,689)(4,261)
Paydowns/maturitiesPaydowns/maturities(57,489)(10,512)Paydowns/maturities(49,180)(57,489)
Amortization of premium/discountAmortization of premium/discount(1,326)(2,013)Amortization of premium/discount(880)(1,326)
Unrealized gain/(loss)Unrealized gain/(loss)(6,638)6,829 Unrealized gain/(loss)3,616 (6,638)
Realized gain/(loss) on saleRealized gain/(loss) on sale(103)579 Realized gain/(loss) on sale(312)(103)
Balance at March 31,Balance at March 31,$652,650 $752,406 Balance at March 31,$485,747 $652,650 

The following is quantitative information about significant unobservable inputs in our Level 3 measurements for those assets and liabilities measured at fair value on a recurring basis ($ in thousands):

March 31, 20222023
Financial InstrumentFinancial InstrumentCarrying ValueValuation TechniqueUnobservable InputMinimumWeighted AverageMaximumFinancial InstrumentCarrying ValueValuation TechniqueUnobservable InputMinimumWeighted AverageMaximum
CMBS(1)CMBS(1)$638,403 Discounted cash flowYield (4)— %1.83 %17.93 %CMBS(1)$476,181 Discounted cash flowYield (4)2.88 %5.67 %17.69 %
Duration (years)(5)01.804.78
CMBS interest-only(1)CMBS interest-only(1)13,743 (2)Discounted cash flowYield (4)(16.65)%4.49 %11.17 %CMBS interest-only(1)9,150 (2)Discounted cash flowYield (4)2.56 %2.85 %22.62 %
Duration (years)(5)01.672.41
Prepayment speed (CPY)(5)100.00100.00100.00
GNMA interest-only(3)GNMA interest-only(3)451 (2)Discounted cash flowYield (4)— %5.29 %10.00 %GNMA interest-only(3)385 (2)Discounted cash flowYield (4)1.28 %5.95 %10.00 %
Duration (years)(5)02.685.22
Prepayment speed (CPJ)(5)517.4235
Agency securities(1)Agency securities(1)53 Discounted cash flowYield (4)2.78 %2.78 %2.78 %Agency securities(1)31 Discounted cash flowYield (4)2.70 %2.70 %2.70 %
Duration (years)(5)000
TotalTotal$652,650 Total$485,747 

December 31, 20212022
Financial InstrumentFinancial InstrumentCarrying ValueValuation TechniqueUnobservable InputMinimumWeighted AverageMaximumFinancial InstrumentCarrying ValueValuation TechniqueUnobservable InputMinimumWeighted AverageMaximum
CMBS(1)CMBS(1)$676,398 Discounted cash flowYield (4)0.77 %1.51 %5.28 %CMBS(1)$532,304 Discounted cash flowYield (4)2.89 %5.29 %17.47 %
Duration (years)(5)01.938.39
CMBS interest-only(1)CMBS interest-only(1)15,344 (2)Discounted cash flowYield (4)— %5.7 %9.34 %CMBS interest-only(1)10,026 (2)Discounted cash flowYield (4)1.39 %3.72 %19.66 %
Duration (years)(5)0.031.812.58
Prepayment speed (CPY)(5)100.00100.00100.00
GNMA interest-only(3)GNMA interest-only(3)559 (2)Discounted cash flowYield (4)— %4.97 %10.00 %GNMA interest-only(3)281 (2)Discounted cash flowYield (4)1.28 %5.50 %10.00 %
Duration (years)(5)02.725.56
Prepayment speed (CPJ)(5)517.4135.00
Agency securities(1)Agency securities(1)563 Discounted cash flowYield (4)1.44 %1.58 %2.78 %Agency securities(1)35 Discounted cash flowYield (4)2.70 %2.70 %2.70 %
Duration (years)(5)00.420.47
TotalTotal$692,864 Total$542,646 
(1)CMBS, CMBS interest-only securities, Agency securities, GNMA constructionpermanent securities, GNMA permanentU.S. Treasury securities and corporate bonds are classified as available-for-sale and reported at fair value with changes in fair value recorded in the current period in other comprehensive income.
(2)The amounts presented represent the principal amount of the mortgage loans outstanding in the pool in which the interest-only securities participate.
(3)AgencyGNMA interest-only securities are recorded at fair value with changes in fair value recorded in current period earnings.

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Sensitivity of the Fair Value to Changes in the Unobservable Inputs
        
(4)Significant increase (decrease) in the unobservable input in isolation would result in significantly lower (higher) fair value measurement.
(5)Significant increase (decrease) in the unobservable input in isolation would result in either a significantly lower or higher (lower or higher) fair value measurement depending on the structural features of the security in question.

Nonrecurring Fair Values

The Company measures fair value of certain assets on a nonrecurring basis when events or changes in circumstances indicate that the carrying value of the assets may be impaired. Adjustments to fair value generally result from the application of lower of amortized cost or fair value accounting for assets held for sale or write-down of assets value due to impairment. Refer to Note 3, Mortgage Loan Receivables and Note 5, Real Estate and Related Lease Intangibles, Net for disclosure of level 3 inputs.

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15. INCOME TAXES
 
The Company elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Code”), commencing with the taxable year ended December 31, 2015 (the REIT Election”). As such, the Company’s income is generally not subject to U.S. federal, state and local corporate income taxes other than as described below.

Certain of the Company’s subsidiaries have elected to be treated as TRSs. TRSs permit the Company to participate in certain activities from which REITs are generally precluded, as long as these activities meet specific criteria, are conducted within the parameters of certain limitations established by the Code, and are conducted in entities which elect to be treated as taxable subsidiaries under the Code. To the extent these criteria are met, the Company will continue to maintain its qualification as a REIT. The Company’s TRSs are not consolidated for U.S. federal income tax purposes, but are instead taxed as corporations. For financial reporting purposes, a provision for current and deferred taxes is established for the portion of earnings recognized by the Company with respect to its interest in TRSs. Current income tax expense (benefit) was $0.9 million for the three months ended March 31, 2023 and $(0.9) million for the three months ended March 31, 2022 and $(2.0) million for the three months ended March 31, 2021.2022.

As of March 31, 20222023 and December 31, 2021,2022, the Company’s net deferred tax assets (liabilities) were $(1.9)$(2.6) million and $(2.3)$(1.8) million, respectively, and are included in other assets (other liabilities) in the Company’s consolidated balance sheets. Deferred income tax expense (benefit) included within the provision for income taxes was $(0.4)$0.8 million and $1.2$(0.4) million for the three months ended March 31, 20222023 and March 31, 2021,2022, respectively. The Company’s net deferred tax liability is comprised of deferred tax assets and deferred tax liabilities. The Company believes it is more likely than not that the deferred tax assets (aside from the exception noted below) will be realized in the future. Realization of the deferred tax assets is dependent upon our generation of sufficient taxable income in future years in appropriate tax jurisdictions to obtain benefit from the reversal of temporary differences. The amount of deferred tax assets considered realizable is subject to adjustment in future periods if estimates of future taxable income change.
 
As of March 31, 2022,2023, the Company had a deferred tax asset of $5.8$4.5 million relating to capital losses which it may only use to offset capital gains. These tax attributes will begin to expire if unused in 2022.2024. As the realization of these assets are not more likely than not before their expiration, the Company provided a full valuation allowance against this deferred tax asset. Additionally, as of March 31, 2022,2023, the Company had $1.3$1.4 million of deferred tax asset related to Code Section 163(j) interest expense limitation. As the Company is uncertain if this asset will be realized in the future, the Company provided a full valuation allowance against this deferred tax asset.

The Company’s tax returns are subject to audit by taxing authorities. Generally, as of March 31, 2022,2023, the tax years 2018-20212019-2022 remain open to examination by the major taxing jurisdictions in which the Company is subject to taxes. The Company is currently under New York City audit for tax years 2012-2013. SeveralOne of the Company’s subsidiary entities areis currently under New York Statean IRS audit for tax years 2015-2018.year 2020. The Company does not expect these audits to result in any material changes to the Company’s financial position. In April 2023, a settlement was reached for $2.6 million with New York City pertaining to an audit of the Company for the years 2012-2013 resulting in an incremental income tax expense of $0.2 million for the three months ended March 31, 2023. The Company does not expect tax expense to have an impact on either short, or long-term liquidity or capital needs.

As of March 31, 2023 and December 31, 2022, the Company’s unrecognized tax benefit is a liability for $2.6 million and $2.4 million, respectively, and is included in the accrued expenses in the Company’s consolidated balance sheets. This unrecognized tax benefit, if recognized, would have a favorable impact on the Company’s effective income tax rate in future periods. As of March 31, 2023, the Company has not recognized a significant amount of any interest or penalties related to uncertain tax positions. In addition, the Company does not believe that it has any tax positions for which it is reasonably possible that it will be required to record a significant liability for unrecognized tax benefits within the next twelve months.

Under U.S. GAAP, a tax benefit related to an income tax position may be recognized when it is more likely than not that the position will be sustained upon examination by the tax authorities based on the technical merits of the position. In addition, the Company does not believe that it has any tax positions for which it is reasonably possible that it will be required to record a significant liability for unrecognized tax benefits within the next twelve months.
 
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17.16. RELATED PARTY TRANSACTIONS

The Company has no material related party relationships to disclose.

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17. COMMITMENTS AND CONTINGENCIES
 
Leases

As of March 31, 2022,2023, the Company had a $0.7$16.2 million lease liability and a $0.8$15.5 million right-of-use asset on its consolidated balance sheets recorded within other liabilities and other assets, respectively. Tenant reimbursements, which consist of real estate taxes and other municipal charges paid by the Company which were reimbursable by our tenants pursuantThe right-of-use lease asset relates to the termsCompany's operating lease of office space. Right-of use lease assets initially equal the net lease agreements, were $1.6 million and $1.1 million forliability. During the three months ended March 31, 2023 and March 31, 2022, the Company recognized $0.5 million and 2021,$0.3 million, respectively, and are included in operating lease income on the Company’sexpenses in its consolidated statements of income.income relating to operating leases.

InvestmentsFuture minimum lease payments under non-cancelable operating leases as of March 31, 2023 are as follows ($ in Unconsolidated Joint Venturesthousands):

The Company has made investments in various unconsolidated joint ventures. Refer
2023 (last 9 months)$788 
20242,171 
20252,207 
20262,219 
20272,232 
Thereafter13,344 
Total undiscounted cash flows22,961 
Present value discount (1)(6,728)
Lease liabilities$16,233 
(1)Lease liabilities were discounted at the Company's weighted average incremental borrowing rate for similar collateral, which is estimated to Note 6, Investment inbe 6.62%, and Advances to Unconsolidated Joint Ventures, for further details of our unconsolidated investments. The Company’s maximum exposure to loss from these investmentsthe remaining lease term is limited to the carrying value of our investments.10.3 years.


Unfunded Loan Commitments
 
As of March 31, 2022,2023, the Company’s off-balance sheet arrangements consisted of $409.7$289.8 million of unfunded commitments on mortgage loan receivables held for investment to provide additional first mortgage loan financing over the next three years at rates to be determined at the time of funding, 52%54% of which additional funds relate to the occurrence of certain “good news” events, such as the owner concluding a lease agreement with a major tenant in the building or reaching some pre-determined net operating income. As of December 31, 2021,2022, the Company’s off-balance sheet arrangements consisted of $390.1$321.8 million of unfunded commitments on mortgage loan receivables held for investment to provide additional first mortgage loan financing.

Commitments are subject to our loan borrowers’ satisfaction of certain financial and nonfinancial covenants and may or may not be funded depending on a variety of circumstances including timing, credit metric hurdles, and other nonfinancial events occurring. The Company carefully monitors the progress of work at properties that serve as collateral underlying its commercial mortgage loans, including the progress of capital expenditures, construction, leasing and business plans in light of the current market conditions. These commitments are not reflected on the consolidated balance sheets. 

Unsettled Trades

As of March 31, 2023, the Company had $109.7 million of U.S. Treasury securities traded and not yet settled on its consolidated balance sheets. The U.S. Treasury securities are recorded within other assets, and the related payable is recorded within other liabilities. These balances relate to the Company’s purchase of U.S. Treasury securities with maturities of less than three months, which will be recorded within cash and cash equivalents upon settlement.



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19.18. SEGMENT REPORTING
 
The Company has determined that it has 3three reportable segments based on how the chief operating decision makers review and manage the business. These reportable segments include loans, securities, and real estate. The loans segment includes mortgage loan receivables held for investment (balance sheet loans) and mortgage loan receivables held for sale (conduit loans).  The securities segment is composed of all of the Company’s activities related to commercial real estate securities, which include investments in CMBS, U.S. Agency securities, corporate bonds, equity securities and equityU.S. Treasury securities. The real estate segment includes net leased properties, office buildings, student housing portfolios, hotels, industrial buildings, a shopping center and condominium units. Corporate/other includes certain of the Company’s investments in joint ventures, other asset management activities and operating expenses.

The Company evaluates performance based on the following financial measures for each segment ($ in thousands):

Three months ended March 31, 2022LoansSecuritiesReal Estate (1)Corporate/Other(2)Company 
Total
Interest income$53,120 $3,065 $— $20 $56,205 
Interest expense(14,283)(452)(11,479)(20,821)(47,035)
Net interest income (expense)38,837 2,613 (11,479)(20,801)9,170 
(Provision for) release of loan loss reserves(874)0— — (874)
Net interest income (expense) after provision for (release of) loan reserves37,963 2,613 (11,479)(20,801)8,296 
Real estate operating income— — 26,354 — 26,354 
Sale of loans, net(949)— — — (949)
Realized gain (loss) on securities— (96)— — (96)
Unrealized gain (loss) on equity securities— 14 — — 14 
Unrealized gain (loss) on Agency interest-only securities— 3 — — 3 
Realized gain on sale of real estate, net— — 29,154 — 29,154 
Fee and other income3,377 15 3,707 95 7,194 
Net result from derivative transactions2,337 804 (6)— 3,135 
Earnings (loss) from investment in unconsolidated joint ventures— — 434 — 434 
Total other income (loss)4,765 740 59,643 95 65,243 
Compensation and employee benefits— — — (29,864)(29,864)
Operating expenses(3)17 — — (5,525)(5,508)
Real estate operating expenses— — (8,992)— (8,992)
Fee expense(799)(48)(166)(975)(1,988)
Depreciation and amortization— — (9,334)(8)(9,342)
Total costs and expenses(782)(48)(18,492)(36,372)(55,694)
Income tax (expense) benefit— — — 1,309 1,309 
Segment profit (loss)$41,946 $3,305 $29,672 $(55,769)$19,154 
Total assets as of March 31, 2022$3,879,040 $662,942 $853,511 $578,704 $5,974,197 


Three months ended March 31, 2023LoansSecuritiesReal Estate (1)Corporate/Other(2)Company 
Total
Interest income$90,874 $10,129 $2 $2,791 $103,796 
Interest expense(28,728)(2,633)(6,653)(22,735)(60,749)
Net interest income (expense)62,146 7,496 (6,651)(19,944)43,047 
(Provision for) release of loan loss reserves(4,736)— — — (4,736)
Net interest income (expense) after provision for (release of) loan reserves57,410 7,496 (6,651)(19,944)38,311 
Real estate operating income— — 23,199 — 23,199 
Net result from mortgage loan receivables held for sale(194)— — — (194)
Realized gain (loss) on securities— (307)— — (307)
Unrealized gain (loss) on securities— 117 — — 117 
Fee and other income1,681 4 2 144 1,831 
Net result from derivative transactions(1,843)(302)(97)— (2,242)
Earnings (loss) from investment in unconsolidated ventures— — 217 — 217 
Gain (loss) on extinguishment of debt— — — 9,217 9,217 
Total other income (loss)(356)(488)23,321 9,361 31,838 
Compensation and employee benefits— — — (22,084)(22,084)
Operating expenses— — — (5,256)(5,256)
Real estate operating expenses— — (9,849)— (9,849)
Fee expense(967)(48)(93)(412)(1,520)
Depreciation and amortization— — (7,425)(104)(7,529)
Total costs and expenses(967)(48)(17,367)(27,856)(46,238)
Income tax (expense) benefit— — — (1,720)(1,720)
Segment profit (loss)$56,087 $6,960 $(697)$(40,159)$22,191 
Total assets as of March 31, 2023$3,795,773 $520,008 $699,601 $845,144 $5,860,526 



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Three months ended March 31, 2021LoansSecuritiesReal Estate (1)Corporate/Other(2)Company 
Total
Three months ended March 31, 2022Three months ended March 31, 2022LoansSecuritiesReal Estate (1)Corporate/Other(2)Company 
Total
Interest incomeInterest income$35,892 $3,234 $— $161 39,287 Interest income$53,120 $3,065 $— $20 $56,205 
Interest expenseInterest expense(14,075)(832)(8,785)(22,281)(45,973)Interest expense(14,283)(452)(11,479)(20,821)(47,035)
Net interest income (expense)Net interest income (expense)21,817 2,402 (8,785)(22,120)(6,686)Net interest income (expense)38,837 2,613 (11,479)(20,801)9,170 
Provision for (release of) loan loss reserves4,251 — — — 4,251 
(Provision for) release of loan loss reserves(Provision for) release of loan loss reserves(874)— — (874)
Net interest income (expense) after provision for (release of) loan reservesNet interest income (expense) after provision for (release of) loan reserves26,068 2,402 (8,785)(22,120)(2,435)Net interest income (expense) after provision for (release of) loan reserves37,963 2,613 (11,479)(20,801)8,296 
Operating lease income— — 24,159 — 24,159 
Real estate operating incomeReal estate operating income— — 26,354 — 26,354 
Net result from mortgage loan receivables held for saleNet result from mortgage loan receivables held for sale(949)— — — (949)
Realized gain (loss) on securitiesRealized gain (loss) on securities— (96)— — (96)
Unrealized gain (loss) on securitiesUnrealized gain (loss) on securities— 17 — — 17 
Realized gain (loss) on securities— 579 — — 579 
Unrealized gain (loss) on Agency interest-only securities— (20)— — (20)
Realized gain on sale of real estate, netRealized gain on sale of real estate, net— — 29,154 — 29,154 
Fee and other incomeFee and other income2,969 — 32 283 3,284 Fee and other income3,377 15 3,707 95 7,194 
Net result from derivative transactionsNet result from derivative transactions3,043 1,728 — — 4,771 Net result from derivative transactions2,337 804 (6)— 3,135 
Earnings (loss) from investment in unconsolidated joint venturesEarnings (loss) from investment in unconsolidated joint ventures— — 436 — 436 Earnings (loss) from investment in unconsolidated joint ventures— — 434 — 434 
Gain (loss) on extinguishment of debt— — — — — 
Total other income (loss)Total other income (loss)6,012 2,287 24,627 283 33,209 Total other income (loss)4,765 740 59,643 95 65,243 
Salaries and employee benefits— — — (9,533)(9,533)
Compensation and employee benefitsCompensation and employee benefits— — — (29,864)(29,864)
Operating expenses(3)Operating expenses(3)9 — — (4,250)(4,241)Operating expenses(3)17 — — (5,525)(5,508)
Real estate operating expensesReal estate operating expenses— — (6,211)— (6,211)Real estate operating expenses— — (8,992)— (8,992)
Fee expenseFee expense(1,426)(50)(123)— (1,599)Fee expense(799)(48)(166)(975)(1,988)
Depreciation and amortizationDepreciation and amortization— — (9,511)(25)(9,536)Depreciation and amortization— — (9,334)(8)(9,342)
Total costs and expensesTotal costs and expenses(1,417)(50)(15,845)(13,808)(31,120)Total costs and expenses(782)(48)(18,492)(36,372)(55,694)
Income tax (expense) benefitIncome tax (expense) benefit— — — 778 778 Income tax (expense) benefit— — — 1,309 1,309 
Segment profit (loss)Segment profit (loss)$30,663 $4,639 $(3)$(34,867)$432 Segment profit (loss)$41,946 $3,305 $29,672 $(55,769)$19,154 
Total assets as of December 31, 2021$3,521,986 $703,280 $914,027 $711,959 $5,851,252 
Total assets as of December 31, 2022Total assets as of December 31, 2022$3,892,382 $587,519 $706,355 $764,917 $5,951,173 
(1)Includes the Company’s investment in unconsolidated joint ventures that held real estate of $5.2$6.3 million and $23.2$6.2 million as of March 31, 20222023 and December 2021,31, 2022, respectively.
(2)Corporate/Other represents all corporate level and unallocated items including any intercompany eliminations necessary to reconcile to consolidated Company totals. This segment also includes the Company’s investment in unconsolidated joint ventures and strategic investments that are not related to the other reportable segments above, including the Company’s investment in FHLB stock of $11.8$9.6 million as of March 31, 20222023 and December 31, 2021,2022, and the Company’s senior unsecured notes of $1.6 billion and $1.6 billion at March 31, 20222023 and December 31, 2021, respectively.
(3)Includes $3.0 million and $2.0 million of professional fees and $0.9 million and $0.9 million of information technology expenses for the three months ended March 31, 2022 and 2021, respectively.

2022.

20.19. SUBSEQUENT EVENTS

The Company has evaluated subsequent events through the issuance date of the financial statements and determined that no additional disclosure is necessary.


Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
The following discussion and analysis of financial condition and results of operations should be read in conjunction with the consolidated financial statements and the related notes of Ladder Capital Corp included within this report and the Annual Report. This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements. See “Cautionary Statement Regarding Forward-Looking Statements” within this Quarterly Report and “Risk Factors” within the Annual Report for a discussion of the uncertainties, risks and assumptions associated with these
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statements. Actual results may differ materially from those contained in any forward-looking statements as a result of various factors, including but not limited to, those in “Risk Factors” set forth within the Annual Report.

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References to “Ladder,” the “Company,” and “we,” “our” and “us” refer to Ladder Capital Corp, a Delaware corporation incorporated in 2013, and its consolidated subsidiaries. 

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.

Overview

Ladder Capital Corp is an 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.

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 $29.1$29.7 billion of commercial real estate loans from our inception in October 2008 through March 31, 2022.2023. During this timeframe, we also acquired $12.9$13.1 billion of predominantly investment grade-rated securities secured by first mortgage loans on commercial real estate and $1.9$2.0 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 March 31, 2022,2023, we originated $16.9 billion of conduit loans, of which $16.8 billion were sold into 71 CMBS securitizations, making us, by volume, the second largest non-bank contributor of loans to CMBS securitizations in the United States in such period. 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.

As of March 31, 2022,2023, we had $6.0$5.9 billion in total assets and $1.5 billion of total equity. Our assets primarily included $3.9$3.8 billion of loans, $0.7 billion of securities, $0.8 billion$693.3 million of real estate, $520.0 million of securities and $0.4 billion$626.1 million of unrestricted cash.

We maintain a diversified and flexible financing strategy supporting our investment strategy and overall business operations, including the use of unsecured corporate bonds, non-recourse, non-mark-to-market CLO debt issuances and committed term financing from leading financial institutions. Refer to “Our Financing Strategies” and “Liquidity and Capital Resources” for further information.

Ladder was founded in October 2008 and we completed our IPO in February 2014. We are led by a disciplined and highly aligned management team. As of March 31, 2022,2023, our management team and directors held interests in our Company comprising over 10% of our total equity. On average, our management team members have over 26 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, is an additional officer of Ladder. As of March 31, 2022,2023, we employed 63 full-time industry professionals.


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We continue to actively manage the liquidity and operations of the Company in light of market conditions, including the impact of the COVID-19 pandemic in the United States.rising interest rates and potential recessionary conditions. The Company has disclosed the impact of current market conditions on our business throughout this Quarterly Report and the Annual Report.





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Our Businesses

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 table summarizes the carrying value of our investment portfolio as reported in our consolidated financial statements as of the dates indicated below ($ in thousands):
March 31, 2022December 31, 2021 March 31, 2023December 31, 2022
LoansLoans  Loans  
Balance sheet loans:Balance sheet loans:Balance sheet loans:
Balance sheet first mortgage loansBalance sheet first mortgage loans$3,773,593 63.1 %$3,454,654 59.0 %Balance sheet first mortgage loans$3,750,799 64.1 %$3,819,860 64.1 %
Other commercial real estate-related loansOther commercial real estate-related loans83,878 1.4 %99,083 1.7 %Other commercial real estate-related loans43,276 0.7 %65,886 1.1 %
Allowance for credit lossesAllowance for credit losses(32,332)(0.5)%(31,752)(0.5)%Allowance for credit losses(25,499)(0.4)%(20,755)(0.3)%
Total balance sheet loansTotal balance sheet loans3,825,139 64.0 %3,521,985 60.2 %Total balance sheet loans3,768,576 64.4 %3,864,991 64.9 %
Conduit first mortgage loansConduit first mortgage loans53,901 0.9 %— — %Conduit first mortgage loans27,197 0.5 %27,391 0.5 %
Total loansTotal loans3,879,040 64.9 %3,521,985 60.2 %Total loans3,795,773 64.9 %3,892,382 65.4 %
Real EstateReal Estate
Real estate and related lease intangibles, netReal estate and related lease intangibles, net693,266 11.8 %700,136 11.8 %
Total real estateTotal real estate693,266 11.8 %700,136 11.8 %
SecuritiesSecurities  Securities  
CMBS investmentsCMBS investments662,296 11.1 %702,178 12.0 %CMBS investments494,727 8.4 %551,776 9.3 %
U.S. Treasury securitiesU.S. Treasury securities24,772 0.4 %35,328 0.6 %
U.S. Agency securities investmentsU.S. Agency securities investments504 — %1,122 — %U.S. Agency securities investments416 — %316 — %
Equity securitiesEquity securities162 — %— — %Equity securities113 — %118 — %
Allowance for credit lossesAllowance for credit losses(20)— %(20)— %Allowance for credit losses(20)— %(20)— %
Total securitiesTotal securities662,942 11.1 %703,280 12.0 %Total securities520,008 8.8 %587,518 9.9 %
Real Estate  
Real estate and related lease intangibles, net792,857 13.3 %865,694 14.8 %
Real estate held for sale55,412 0.9 %25,179 0.4 %
Total real estate848,269 14.2 %890,873 15.2 %
Other InvestmentsOther Investments  Other Investments  
Investments in and advances to unconsolidated joint ventures5,243 0.1 %23,154 0.4 %
Investments in and advances to unconsolidated venturesInvestments in and advances to unconsolidated ventures6,336 0.1 %6,219 0.1 %
Total other investmentsTotal other investments5,243 0.1 %23,154 0.4 %Total other investments6,336 0.1 %6,219 0.1 %
Total investmentsTotal investments5,395,494 90.4 %5,139,292 87.9 %Total investments5,015,383 85.6 %5,186,255 87.1 %
Cash, cash equivalents and restricted cashCash, cash equivalents and restricted cash495,224 8.3 %621,546 10.6 %Cash, cash equivalents and restricted cash651,297 11.1 %659,602 11.1 %
Other assetsOther assets83,479 1.4 %90,414 1.5 %Other assets193,846 3.3 %105,316 1.8 %
Total assetsTotal assets$5,974,197 100 %$5,851,252 100 %Total assets$5,860,526 100 %$5,951,173 100 %
 
Loans
 
Balance Sheet First Mortgage Loans.  We originate and invest in balance sheet first mortgage loans secured by commercial real estate properties that are typically undergoing transition, including lease-up, sell-out, and renovation or repositioning. These mortgage loans are structured to fit the needs and business plans of the property owners, and generally have SOFR-based or LIBOR-based floating rates and terms (including extension options) ranging from one to five years. Our loans are directly originated by an internal team that has longstanding and strong relationships with borrowers and mortgage brokers throughout the United States. We follow a rigorous investment process, which begins with an initial due diligence review; continues through a comprehensive legal and underwriting process incorporating multiple internal and external checks and balances; and culminates in approval or disapproval of each prospective investment by our Investment Committee. Balance sheet first mortgage loans in excess of $50.0 million also require the approval of our board of directors’ Risk and Underwriting Committee.

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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 collateralized loan obligation (“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 have been typically repaid at or prior to maturity (including by being refinanced by us into a new conduit first mortgage loan upon property stabilization). As of March 31, 2022,2023, we held a portfolio of 143137 balance sheet first mortgage loans with an aggregate book value of $3.8 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 68.2%67.9% at March 31, 2022.2023.
 
Other Commercial Real Estate-Related Loans.  We selectively invest in note purchase financings, subordinated debt, mezzanine debt and other structured finance products related to commercial real estate that are generally held for investment. As of March 31, 2022,2023, we held a portfolio of 1911 other commercial real estate-related loans with an aggregate book value of $83.9$43.3 million. Based on the loan balance and the “as-is” third-party FIRREA appraised values at origination, the weighted average loan-to-value ratio of the portfolio was 65.9%77.7% at March 31, 2022.2023.

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 twoone conduit loansloan with an aggregate carrying value of $53.9$27.2 million at March 31, 2022.2023.

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. As of March 31, 2022, we held two conduit first mortgage loans that were available for contribution into securitizations. The Company will holdholds these conduit loans in its taxable REIT subsidiary (“TRS”) upon origination. As of March 31, 2023, we held one conduit first mortgage loan that was available for contribution into securitizations. Based on the loan balances and the “as-is” third-party FIRREA appraised values at origination, loan-to-value ratio of this loan was 58.9% at March 31, 2023.

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 March 31, 20222023, and a breakdown of our loan portfolio by loan size and geographic location and asset type of the underlying real estate by loan balance.

ladr-20220331_g2.jpg


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Loan pie charts (2023-03-31).jpg

Real Estate

Net Leased Commercial Real Estate Properties. As of March 31, 2022,2023, we owned 158156 single tenant net leased properties with an aggregate book value of $520.3$492.9 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 March 31, 2022,2023, our net leased properties comprised a total of 4.03.8 million square feet, 100% leased with an average age since construction of 17.618.7 years and a weighted average remaining lease term of 10.39.5 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 in our real estate portfolio are necessity-based businesses and have remained open and stable during the COVID-19 pandemic.businesses. During the three months ended March 31, 2022,2023, we collected 100% of rent on these properties.
 
Diversified Commercial Real Estate Properties. As of March 31, 2022,2023, we owned 6148 diversified commercial real estate properties throughout the U.S with an aggregate book value of $337.2$200.4 million. During the three months ended March 31, 2022,2023, we collected 99%100% of rent on these properties.

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The following charts summarize the composition of our real estate investments as of March 31, 20222023 ($ in millions):

Undepreciated Real Estate Book ValueReal Estate LocationReal Estate TypeReal Estate pie charts (2023-03-31).jpg

ladr-20220331_g3.jpg

We continue to actively monitor our commercial real estate properties in light of the current market conditions, including consideration of any long-term impacts on the buildings, tenants, business plans and the ability to execute those business plans.

Securities
 
CMBS Investments.We invest primarily in CMBS, including CLOs, secured by first mortgage loans on commercial real estate and own predominantly AAA-rated securities. These investments provide a stable and attractive base of net interest income and help us manage our liquidity. We have significant in-house expertise in the evaluation and trading of these securities, due in part to our experience in originating and underwriting mortgage loans that comprise assets within CMBS trusts, as well as our experience in structuring CMBS transactions. AAA-rated CMBS or U.S. Agency securities investments in excess of $76.0 million and all other investment grade CMBS or U.S. Agency securities investments in excess of $51.0 million, each in any single class of any single issuance, require the approval of our board of directors’ Risk and Underwriting Committee. The Risk and Underwriting Committee also must approve any investments in non-rated or sub-investment grade CMBS or U.S. Agency securities in any single class of any single issuance in excess of the lesser of (x) $21.0 million and (y) 10% of the total net asset value of the respective Ladder subsidiary or other entity for which Ladder has authority to make investment decisions.

The Company invests in primarily AAA-rated real estate securities, typically front pay securities, with relatively short duration and significant subordination. The hyperamortization features included in many of the securities positions we own help mitigate potential credit losses in the event of adverse market conditions.

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As of March 31, 2022,2023, the estimated fair value of our portfolio of CMBS investments totaled $662.3$494.7 million in 8479 CUSIPs ($7.96.3 million average investment per CUSIP). Included in the $662.3$494.7 million of CMBS securities are $10.1$9.4 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, 99.5% of which were rated investment grade by Standard & Poor’s Ratings Group, Moody’s Investors Service, Inc. or Fitch Ratings Inc. as of March 31, 2022:2023:
ladr-20220331_g4.jpg
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Securities pie charts (2023-03-31).jpg
In the future, we may invest in CMBS securities or other securities that are unrated. As of March 31, 2022,2023, our CMBS investments had a weighted average duration of 1.81.0 years. The commercial real estate collateral underlying our CMBS investment portfolio is located throughout the United States. As of March 31, 2022,2023, by property count and market value, respectively, 63.4%53.4% and 76.0%76.7% of the collateral underlying our CMBS investment portfolio was distributed throughout the top 25 metropolitan statistical areas (“MSAs”) in the United States, with 5.5%3.1% and 46.5%36.2%, by property count and market value, respectively, of the collateral located in the New York-Newark-EdisonYork-Newark-Jersey City MSA, and the concentrations in each of the remaining top 24 MSAs ranging from 0.1%0.2% to 7.8%9.9% by property count and 0.1% to 9.6%13.8% by market value.

Other Investments

Unconsolidated Joint Venture.  In connection with the origination of a loan in April 2012, we received a 25% equity interest with the right to convert upon a capital event. On March 22, 2013, we refinanced the loan, and we converted our equity interest into a 19% limited liability company membership interest in Grace Lake JV, LLC (“Grace Lake LLC”). As of March 31, 2022,2023, Grace Lake LLC owned an office building campus with a carrying value of $51.0$49.1 million, which is net of accumulated depreciation of $42.5$47.3 million, that is financed by $58.1$40.0 million of long-term debt. Debt of Grace Lake LLC is non-recourse to the limited liability company members, except for customary non-recourse carve-outs for certain actions and environmental liability. As of March 31, 2022,2023, the book value of our investment in Grace Lake LLC was $5.2$6.3 million.

Our Financing Strategies
 
Our financing strategies are critical to the success and growth of our business. We manage our financing to complement our asset composition and to diversify our exposure across multiple capital markets and counterparties. In addition to cash flow from operations, we fund our operations and investment strategy through a diverse array of funding sources, including:

•Unsecured corporate bonds
•CLO transactions
•Secured loan and securities repurchase facilities
•Non-recourse mortgage debt
•Revolving credit facility
•FHLB financing
•Other secured financing facilities
•Loan sales and securitizations
•Unencumbered assets available for financing
•Equity
 
From time to time, we may add financing counterparties that we believe will complement our business, although the agreements governing our indebtedness may limit our ability and the ability of our present and future subsidiaries to incur additional indebtedness. Our amended and restated charter and by-laws do not impose any threshold limits on our ability to use leverage. Refer to our discussion below and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and
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Capital Resources” and Note 76 Debt Obligations, Net in our consolidated financial statements included elsewhere in this Quarterly Report for more information about our financing arrangements.



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Unsecured Corporate Bonds

As of March 31, 2022,2023, we had $1.6 billion of unsecured corporate bonds outstanding. These unsecured financings were comprised of $348.0$327.8 million in aggregate principal amount of 5.25% senior notes due 2025 (the “2025 Notes”) and $651.8, $614.4 million in aggregate principal amount of 4.25% senior notes due 2027 (the “2027 Notes”) and $650.0$642.9 million in aggregate principal amount of 4.75% senior notes due 2029 (the “2029 Notes,” and collectively with the 2025 Notes and the 2027 Notes, the “Notes”).

Due in large part to devoting such a large portion of the Company’s capital structure to equity and unsecured corporate bond debt, Ladder maintains a $2.8$2.9 billion pool of unencumbered assets, comprised primarily of first mortgage loans and unrestricted cash as of March 31, 2022.2023.

CLO Debt

On July 13, 2021, a consolidated subsidiary of the Company completed a privately marketed CLO transaction, which generated $498.2 million of gross proceeds to Ladder, financing $607.5 million of loans (“Contributed July 2021 Loans”) at an 82% advance rate on a matched term, non-mark-to-market and non-recourse basis. A consolidated subsidiary of the Company retained an 18% subordinate and controlling interest in the CLO. The Company retained control over major decisions made with respect to the administration of the Contributed July 2021 Loans, including broad discretion in managing these loans, and has the ability to appoint the special servicer under the CLO.

On December 2, 2021, a consolidated subsidiary of the Company completed a privately marketed CLO transaction, which generated $566.2 million of gross proceeds to Ladder, financing $729.4 million of loans (“Contributed December 2021 Loans”) at a 77.6% advance rate on a matched term, non-mark-to-market and non-recourse basis. A consolidated subsidiary of the Company retained an 15.6% subordinate and controlling interest in the CLO. The Company also held two additional tranches as investments totaling 6.8% interest in the CLO. The Company retained control over major decisions made with respect to the administration of the Contributed December 2021 Loans, including broad discretion in managing these loans, and has the ability to appoint the special servicer under the CLO.

As of March 31, 2022,2023, the Company had $1.1 billion of matched term, non-mark-to-market and non-recourse CLO debt included in debt obligations on its consolidated balance sheets. Unamortized debt issuance costs of $9.0$4.8 million were included in CLO debt as of March 31, 2022.2023. The CLOs are considered variable interest entities (“VIEs”) of which the Company is the primary beneficiary and, therefore, consolidated the VIEVIEs - See Note 10,9, Consolidated Variable Interest Entities.

Committed Loan Financing Facilities
 
We are parties to multiple committed loan repurchase agreement facilities, totaling $1.3$1.2 billion of credit capacity. As of March 31, 2022,2023, the Company had $412.3$651.2 million of borrowings outstanding, with an additional $0.9 billion$548.8 million of committed financing available. Assets pledged as collateral under these facilities are generally limited to first mortgage whole mortgage loans, mezzanine loans and certain interests in such first mortgage and mezzanine loans. Our repurchase facilities include covenants covering net worth requirements, minimum liquidity levels, and maximum debt/equity ratios.
 
We have the option to extend some of our existing facilities subject to a number of customary conditions. The lenders have sole discretion to include collateral in these facilities and to determine the market value of the collateral on a daily basis, and, if the estimated market value of the included collateral declines, the lenders have the right to require additional collateral or a full and/or partial repayment of the facilities (margin call) sufficient to rebalance the facilities. Typically, the lender establishes a maximum percentage of the collateral asset’s market value that can be borrowed. We often borrow at a lower percentage of the collateral asset’s value than the maximum, leaving us with excess borrowing capacity that can be drawn upon at a later date and/or applied against future margin calls so that they can be satisfied on a cashless basis.







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Securities Repurchase Facilities

We are a party to a committed term master repurchase agreement with a major U.S. banking institution for CMBS, totaling $400.0$100.0 million of credit capacity, or more depending on our utilization of a loan repurchase facility with the same lender.capacity. As we do in the case of borrowings under committed loan facilities, we often borrow at a lower percentage of the collateral asset’s value than the maximum, leaving us with excess borrowing capacity that can be drawn upon at a later date and/or applied against future margin calls so that they can be satisfied on a cashless basis. As of March 31, 2022,2023, the Company had $28.8$8.0 million borrowings outstanding, with an additional $606.3$92.0 million of committed financing available.

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Additionally, we are a party to multiple uncommitted master repurchase agreements with several counterparties to finance our investments in CMBS and U.S. Agency securities. The securities that serve as collateral for these borrowings are typically 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 cash collateral. If the estimated market value of the collateral subsequently increases, we have the right to call back excess cash collateral.

Mortgage Loan Financing
 
We generally finance our real estate using long-term non-recourse mortgage financing. During the three months ended March 31, 2022,2023, we executed nodid not execute any long term debt agreementsagreement to finance real estate. All of ourOur mortgage loan financings have primarily fixed rates ranging from 3.75%4.25% to 6.16%8.53%, mature between 2022-20312024-2031 and total $648.7$469.7 million as of March 31, 2022.2023. These long-term non-recourse mortgages include net unamortized premiums of $2.8$2.3 million at March 31, 2022,2023, representing proceeds received upon financing greater than the contractual amounts due under the agreements. The premiums are being amortized over the remaining life of the respective debt instruments using the effective interest method. We recorded $0.3$0.2 million of premium amortization, which decreased interest expense, for the three months ended March 31, 2022.2023. The loans are collateralized by real estate and related lease intangibles, net, of $749.0$523.0 million as of March 31, 2022.2023.

Revolving Credit Facility
 
The Company’s revolving credit facility (the “Revolving Credit Facility”) provides for an aggregate maximum borrowing amount of $266.4$323.9 million, including a $25.0 million sublimit for the issuance of letters of credit. The Revolving Credit Facility is available on a revolving basis to finance the Company’s working capital needs and for general corporate purposes. The Revolving Credit Facility has a final maturity date, assuming all extension options are exercised, of February 2025.July 2027. The interest rate is one-month LIBOR plus 3.00% on Eurodollar advances.advances is the sum of one-month Term SOFR plus a fixed margin of 2.50%, with reductions in the fixed margin upon the achievement of investment grade credit ratings. As of March 31, 2022,2023, the Company had no outstanding borrowings on the Revolving Credit Facility.
 
The obligations under the Revolving Credit Facility are guaranteed by the Company and certain of its subsidiaries. The Revolving Credit Facility is secured by a pledge of the shares of (or other ownership or equity interests in) certain subsidiaries to the extent the pledge is not restricted under existing regulations, law or contractual obligations.
 
LCFH is subject to customary affirmative covenants and negative covenants, including limitations on the incurrence of additional debt, liens, restricted payments, sales of assets and affiliate transactions under the Revolving Credit Facility. In addition, under the Revolving Credit Facility, LCFH is required to comply with financial covenants relating to minimum net worth, maximum leverage, minimum liquidity, and minimum fixed charge coverage, consistent with our other credit facilities.

FHLB Financing
 
We have maintained membership inbecame a member of the FHLB sincein 2012 through our subsidiary, Tuebor Captive Insurance Company LLC (“Tuebor”). In 2016, the FHFA adopted a final rule that limited our captive insurance subsidiary’s membership in the FHLB, requiring us to significantly reduce the amounts of FHLB borrowings outstanding by February 2021. The Company has complied with such targeted paydowns. As of March 31, 2022,2023, Tuebor had $263.0$213.0 million of borrowings outstanding from the FHLB, with terms of 0.440.4 years to 2.51.5 years, interest rates of 0.61%2.74% to 2.74%5.18%, and advance rates of 71.7% to 95.7%97.1% on eligible collateral, including cash collateral. As of March 31, 2022,2023, collateral for the borrowings was comprised of $262.2$250.7 million of CMBS and U.S. Agency securities, and $36.7 million of cash collateral.securities.

Secured Financing Facility

On April 30, 2020, the Company entered into a strategic financing arrangement (the “Agreement”) with an American multinational corporation (the “Lender”), under which the Lender provided the Company with approximately $206.4 million in
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senior secured financing (the “Secured Financing Facility”) to fund transitional and land loans. The Secured Financing Facility is secured on a first lien basis on a portfolio of certain of the Company’s loans, will mature on May 6, 2023, and borrowings thereunder bear interest at LIBOR (or a minimum of 0.75% if greater) plus 10.0%, with a minimum interest premium clause, of which approximately $2.0 million remains at March 31, 2022. The Secured Financing Facility is non-recourse, subject to limited exceptions, and does not contain mark-to-market provisions. Additionally, the Secured Financing Facility provides the Company optionality to modify or restructure loans or forbear in exercising remedies, which maximizes the Company’s financial flexibility.

As part of the strategic financing, the Lender also had the ability to make an equity investment in the Company of up to 4.0 million Class A common shares at $8.00 per share, subject to certain adjustments (the “Purchase Right”). The Purchase Right was exercised in full at $8.00 per share on December 27, 2020. The Lender has agreed not to sell, transfer, assign, pledge, hypothecate, mortgage, dispose of or in any way encumber the shares acquired as a result of exercising the Purchase Right for a period of time following the exercise date. In connection with the issuance of the Purchase Right, the Company and the Lender entered into a registration rights agreement, pursuant to which the Company has agreed to provide customary demand and piggyback registration rights to the Lender.

As of March 31, 2022, the Company had $109.6 million of borrowings outstanding under the Secured Financing Facility included in debt obligations on its consolidated balance sheets, net of unamortized debt issuance costs of $0.3 million and a $0.3 million unamortized discount related to the Purchase Right.

Hedging Strategies

We may enter into interest rate and credit spread derivative contracts to mitigate our exposure to changes in interest rates and credit spreads. We generally seek to hedge the interest rate risk on the financing of assets that have a duration longer than five years, including newly-originated conduit first mortgage loans, securities in our CMBS portfolio if long enough in duration, and most of our U.S. Agency securities portfolio. We monitor our asset profile and our hedge positions to manage our interest rate and credit spread exposures, and we seek to match fund our assets according to the liquidity characteristics and expected holding periods of our assets.

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Financial Covenants

We generally seek to maintain a debt-to-equity ratio of approximately 3.0:1.0 or below. We expect this ratio to fluctuate during the course of a fiscal year due to the normal course of business in our conduit lending operations, in which we generally securitize our inventory of conduit loans at intervals, and also because of changes in our asset mix, due in part to such securitizations. We generally seek to match fund our assets according to their liquidity characteristics and expected hold period. We believe that the defensive positioning of our predominantly senior secured assets and our financing strategy has allowed us to maintain financial flexibility to capitalize on an attractive range of market opportunities as they have arisen.

We and our subsidiaries may incur substantial additional debt in the future. However, we are subject to certain restrictions on our ability to incur additional debt in the indentures governing the Notes (the “Indentures”) and our other debt agreements. Under the Indentures, we may not incur certain types of indebtedness unless our consolidated non-funding debt to equity ratio (as defined in the Indentures) is less than or equal to 1.75:1.00 or if the unencumbered assets of the Company and its subsidiaries is less than 120% of their unsecured indebtedness, although our subsidiaries are permitted to incur indebtedness where recourse is limited to the assets and/or the general credit of such subsidiary.

Our borrowings under certain financing agreements and our committed repurchase facilities are subject to maximum consolidated leverage ratio limits (either a fixed ratio ranging from 3.5:1.0 to 4.0:1.0, or a maximum ratio based on our asset composition at the time of determination), minimum net worth requirements (ranging from $400.0 million to $871.4 million), maximum reductions in net worth over stated time periods, 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), and a fixed charge coverage ratio of 1.25x, and, in the instance of one lender, an interest coverage ratio of 1.50x, in each case, if certain liquidity thresholds are not satisfied. Leverage ratio limits exclude CLO financing for purposes of this covenant calculation. These restrictions, which would permit us to incur substantial additional debt, are subject to significant qualifications and exceptions.

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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.

We are in compliance with all covenants as described in this Quarterly Report as of March 31, 2022.


2023.


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Results of Operations

A discussion regarding our results of operations for the three months ended March 31, 20222023 compared to the three months ended March 31, 2021 and December 31, 20212022 is presented below. We have elected

Three months endedMarch 31, 2023 compared to present a comparison of our results of operations for the current quarter with that of the immediately preceding quarter, as permitted under the recently amended SEC disclosure guidelines. We believe this comparative period analysis shows our results in a more meaningful manner given that our business does not experience seasonality.three months ended December 31, 2022

The following table sets forth information regarding our consolidated results of operations ($ in thousands):
Three months endedChange March 31, 2022 vs Three Months Ended
March 31, 2022December 31, 2021March 31, 2021December 31, 2021March 31, 2021 March 31, 2023December 31, 2022Difference
Net interest incomeNet interest income  Net interest income 
Interest incomeInterest income$56,205 $52,999 $39,287 $3,206 $16,918 Interest income$103,796 $94,688 $9,108 
Interest expenseInterest expense47,035 42,411 45,973 4,624 1,062 Interest expense60,749 57,390 3,359 
Net interest income9,170 10,588 (6,686)(1,418)15,856 
Provision for (release of) loan loss reserves874 (1,763)(4,251)2,637 5,125 
Net interest income (expense)Net interest income (expense)43,047 37,298 5,749 
Provision for (release of) loan loss reserves, netProvision for (release of) loan loss reserves, net4,736 2,338 2,398 
Net interest income (expense) after provision for (release of) loan lossesNet interest income (expense) after provision for (release of) loan losses8,296 12,351 (2,435)(4,055)10,731 Net interest income (expense) after provision for (release of) loan losses38,311 34,960 3,351 
Other income (loss)Other income (loss)  Other income (loss) 
Real estate operating incomeReal estate operating income26,354 24,244 24,159 2,110 2,195 Real estate operating income23,199 25,590 (2,391)
Sale of loans, net(949)1,713 — (2,662)(949)
Net result from mortgage loan receivables held for saleNet result from mortgage loan receivables held for sale(194)(428)234 
Realized gain (loss) on securitiesRealized gain (loss) on securities(96)716 579 (812)(675)Realized gain (loss) on securities(307)2 (309)
Unrealized gain (loss) on equity securities14 — — 14 14 
Unrealized gain (loss) on Agency interest-only securities3 (4)(20)7 23 
Unrealized gain (loss) on securitiesUnrealized gain (loss) on securities117 12 105 
Realized gain (loss) on sale of real estate, netRealized gain (loss) on sale of real estate, net29,154 18,611 — 10,543 29,154 Realized gain (loss) on sale of real estate, net— 53,897 (53,897)
Fee and other incomeFee and other income7,194 2,767 3,284 4,427 3,910 Fee and other income1,831 2,785 (954)
Net result from derivative transactionsNet result from derivative transactions3,135 747 4,771 2,388 (1,636)Net result from derivative transactions(2,242)(21)(2,221)
Earnings (loss) from investment in unconsolidated joint ventures434 373 436 61 (2)
Earnings from investment in unconsolidated venturesEarnings from investment in unconsolidated ventures217 213 4 
Gain on extinguishment of debtGain on extinguishment of debt9,217 — 9,217 
Total other income (loss)Total other income (loss)65,243 49,167 33,209 16,076 32,034 Total other income (loss)31,838 82,050 (50,212)
Costs and expensesCosts and expenses  Costs and expenses 
Compensation and employee benefitsCompensation and employee benefits29,864 10,911 9,533 18,953 20,331 Compensation and employee benefits22,084 16,671 5,413 
Operating expensesOperating expenses5,508 4,797 4,241 711 1,267 Operating expenses5,256 5,414 (158)
Real estate operating expensesReal estate operating expenses8,992 6,643 6,211 2,349 2,781 Real estate operating expenses9,849 9,678 171 
Fee expenseFee expense1,988 379 1,599 1,609 389 Fee expense1,520 2,073 (553)
Depreciation and amortizationDepreciation and amortization9,342 9,481 9,536 (139)(194)Depreciation and amortization7,529 7,909 (380)
Total costs and expensesTotal costs and expenses55,694 32,211 31,120 23,483 24,574 Total costs and expenses46,238 41,745 4,493 
Income (loss) before taxesIncome (loss) before taxes17,845 29,307 (346)(11,462)18,191 Income (loss) before taxes23,911 75,265 (51,354)
Income tax expense (benefit)Income tax expense (benefit)(1,309)2,236 (778)(3,545)(531)Income tax expense (benefit)1,720 1,012 708 
Net income (loss)Net income (loss)$19,154 $27,071 $432 $(7,917)$18,722 Net income (loss)22,19174,253(52,062)
Net (income) loss attributable to noncontrolling interests in consolidated joint ventures(122)37 (240)(159)118 
Net (income) loss attributable to noncontrolling interests in consolidated venturesNet (income) loss attributable to noncontrolling interests in consolidated ventures217 (14,700)14,917 
Net income (loss) attributable to Class A common shareholdersNet income (loss) attributable to Class A common shareholders$19,032 $27,108 $192 $(8,076)$18,840 Net income (loss) attributable to Class A common shareholders$22,408 $59,553 $(37,145)
Investment Overview

Activity for the three months ended March 31, 2023 included originating and funding $32.6 million in principal value of commercial mortgage loans, which was partially offset by $131.3 million of principal repayments. We acquired $3.5 million of new securities, which was offset by $13.6 million of sales and $60.2 million of amortization and paydowns in the portfolio, which partially contributed to a net decrease in our securities portfolio of $67.5 million during the three months ended March 31, 2023. In addition, we purchased $1.0 billion of short-term U.S. treasury securities during the three months ended March 31, 2023, of which $574 million matured during the three months ended March 31, 2023.
 
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ThreeActivity for the three months ended December 31, 2022 included originating and funding $51.3 million in principal value of commercial mortgage loans, which was partially offset by $180.5 million of principal repayments. We acquired $28.1 million of new securities, which was partially offset by $0.3 million of sales and $48.0 million of amortization in the portfolio, which partially contributed to a net decrease in our securities portfolio of $23.0 million during the three months ended December 31, 2022. We received proceeds from the sale of real estate of $137.4 million.

Net Interest Income
The $9.1 million increase in interest income was primarily attributable to an increase in prevailing interest rates, partially offset by a reduction in our outstanding loan balances as a result of net paydowns. For the three months ended March 31, 2023, the amortized cost of securities investments averaged $0.5 billion and the amortized cost of loan investments averaged $3.9 billion. For the three months ended December 31, 2022, securities investments averaged $0.6 billion and loan investments averaged $4.0 billion. There was a $51.8 million decrease in average securities investments, and a $97.1 million decrease in average loan investments.

The $3.4 million increase in interest expense is primarily related to an increase in utilization of our repurchase facilities and increases in interest expense as a result of rising prevailing interest rates.

The increase in net interest income before provision for loan losses of $5.7 million as explained above.

As of March 31, 2023, the weighted average yield on our mortgage loan receivables was 9.1%, compared to 8.8% as of December 31, 2022. The weighted average yield increased as a result of increases in the prevailing interest rates. As of March 31, 2023, the weighted average interest rate on borrowings against our mortgage loan receivables was 6.5%, compared to 6.0% as of December 31, 2022. The increase in the rate on borrowings against our mortgage loan receivables from December 31, 2022 to March 31, 2023 was primarily due to increases in prevailing interest rates. As of March 31, 2023, we had outstanding borrowings secured by our mortgage loan receivables equal to 45.1% of the carrying value of our mortgage loan receivables, compared to 43.0% as of December 31, 2022.

As of March 31, 2023, the weighted average yield on our securities was 5.6%, compared to 5.2% as of December 31, 2022. As of March 31, 2023, the weighted average interest rate on borrowings against our securities was 5.2%, compared to 4.8% as of December 31, 2022. The increase in the rate on borrowings against our securities from December 31, 2022 to March 31, 2023 was primarily due to higher prevailing market borrowing rates as of March 31, 2023 compared to December 31, 2022. As of March 31, 2023, we had outstanding borrowings secured by our securities equal to 63.7% of the carrying value of our securities, compared to 75.6% as of December 31, 2022.
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 March 31, 2023, and December 31, 2022, the weighted average interest rate on mortgage borrowings against our real estate was 5.7% and 5.5%, respectively. As of March 31, 2023, we had outstanding borrowings secured by our real estate equal to 67.8% of the carrying value of our real estate, compared to 71.1% as of December 31, 2022.

Provision for (release of) Loan Loss Reserves

The provision for the three months ended March 31, 2023 was $4.7 million, primarily due to adverse changes in macroeconomic scenarios.

The provision for the three months ended December 31, 2022 was $2.3 million primarily due to adverse changes in macroeconomic scenarios. For additional information, refer to Note 3, Mortgage Loan Receivables, in the consolidated financial statements.

Real Estate Operating Income

The decrease of $2.4 million in real estate operating income was primarily attributable to real estate sales that occurred during the three months ended December 31, 2022.





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Net Result from Mortgage Loan Receivables Held for Sale

Net result from mortgage loan receivables held for sale, includes all loan sales, whether by securitization, whole loan sales or other means. Net result from mortgage loan receivables held for sale also includes unrealized losses on loans related to lower of cost or market adjustments. During the three months ended March 31, 2023, we did not transfer any balance sheet first mortgage or conduit loans and recorded a lower of cost or market adjustment of $0.2 million. During the three months ended December 31, 2022, we did not transfer any balance sheet mortgage loans or conduit loans and recorded $0.4 million net in lower of cost or market adjustments. 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.
Realized Gain (Loss) on Sale of Real Estate, Net
There was a decrease of $(53.9) million in realized gain (loss) on the sale of real estate for the three months ended March 31, 2023. The decrease was the result of no sale activity for the three months ended March 31, 2023 compared to the sale of an apartment building, one retail building and an office building for a realized gain of $53.9 million for the three months ended December 31, 2022.

Fee and Other Income
We generate fee income on the loans we originate and in which we invest, and dividend income on our FHLB stock. The $1.0 million decrease in fee and other income was primarily due to fees earned in connection with the payoff of our mortgage loan debt as a result of the sale of real estate for the three months ended December 31, 2022 as compared to the three months ended March 31, 2023.

Net Result from Derivative Transactions
Net result from derivative transactions of $(2.2) million is composed of a realized loss of $1.8 million and an unrealized loss of $0.4 million for the three months ended March 31, 2023, compared to a net immaterial loss for the three months ended December 31, 2022, which was comprised of a realized gain of $0.2 million and an unrealized loss of $0.2 million. 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 loss in 2023 was primarily related to movement in interest rates during the three months ended March 31, 2023. 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.
Earnings (Loss) from Investment in Unconsolidated Ventures
Earnings from our investment in Grace Lake LLC totaled $0.2 million for the three months ended March 31, 2023 and December 31, 2022. Our maximum exposure to loss from these investments is limited to the carrying value of our investments.

Gain (Loss) on Extinguishment of Debt

During the three months ended March 31, 2023, there was $9.2 million of gain on extinguishment of debt as 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) $36.4 million of principal of the 2027 Notes for a repurchase price of $29.7 million, recognizing a $6.4 million net gain on extinguishment of debt after recognizing $(288) thousand of unamortized debt issuance costs associated with the retired debt and (3) $6.1 million of principal of the 2029 Notes for a repurchase price of $4.6 million, recognizing a $1.4 million net gain on extinguishment of debt after recognizing $(76) thousand of unamortized debt issuance costs associated with the retired debt. There was no gain (loss) on extinguishment of debt for the three months ended December 31, 2022.

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Compensation and Employee Benefits

Compensation and employee benefits are comprised primarily of salaries, bonuses, equity based compensation and other employee benefits. The increase of $5.4 million in compensation expense was primarily attributable to the timing of our annual equity based compensation, which was granted during three months ended March 31, 2023 whereas there was no equity based compensation granted during the three months ended December 31, 2022.

Operating Expenses

Operating expenses are primarily composed of professional fees, lease expense and technology expenses. The decrease during the three months ended March 31, 2023 compared to the three months ended December 31, 20212022 of $(0.2) million was primarily related to a decrease in technology expenses.

Real Estate Operating Expenses

The increase during the three months ended March 31, 2023 compared to the three months ended December 31, 2022 of $0.2 million in real estate operating expense is primarily the result of increases in hotel operations at our properties offset by the sale of real estate properties during the three months ended December 31, 2022.
Fee Expense
Fee expense is comprised primarily of custodian fees, financing costs and servicing fees related to loans. The decrease during the three months ended March 31, 2023 compared to the three months ended December 31, 2022 of $(0.6) million was primarily attributable to a decrease in legal fees and a decrease in other professional fees.
Depreciation and Amortization
The $(0.4) million decrease during the three months ended March 31, 2023 compared to the three months ended December 31, 2022 in depreciation and amortization is primarily attributable to the timing of the real estate sales during the previous quarter.
Income Tax (Benefit) Expense
Most of our consolidated income tax provision related to the business units held in our TRSs. The increase in expense during the three months ended March 31, 2023 compared to the three months ended December 31, 2022 is primarily a result of changes in our forecasted GAAP income in our TRSs.
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Results of Operations

A discussion regarding our results of operations for the three months ended March 31, 2023 compared to the three months ended March 31, 2022 is presented below.

Three months ended March 31, 2023 compared to the three months ended March 31, 2022

The following table sets forth information regarding our consolidated results of operations ($ in thousands):
Three Months Ended March 31,
20232022Difference
Net interest income
Interest income$103,796 $56,205 $47,591 
Interest expense60,749 47,035 13,714 
Net interest income (expense)43,047 9,170 33,877 
Provision for (release of) loan loss reserves, net4,736 874 3,862 
Net interest income (expense) after provision for (release of) loan losses38,311 8,296 30,015 
Other income (loss)
Real estate operating income23,199 26,354 (3,155)
Net result from mortgage loan receivables held for sale(194)(949)755 
Realized gain (loss) on securities(307)(96)(211)
Unrealized gain (loss) on securities117 17 100 
Realized gain (loss) on sale of real estate, net— 29,154 (29,154)
Fee and other income1,831 7,194 (5,363)
Net result from derivative transactions(2,242)3,135 (5,377)
Earnings from investment in unconsolidated ventures217 434 (217)
Gain on extinguishment of debt9,217 — 9,217 
Total other income (loss)31,838 65,243 (33,405)
Costs and expenses
Compensation and employee benefits22,084 29,864 (7,780)
Operating expenses5,256 5,508 (252)
Real estate operating expenses9,849 8,992 857 
Fee expense1,520 1,988 (468)
Depreciation and amortization7,529 9,342 (1,813)
Total costs and expenses46,238 55,694 (9,456)
Income (loss) before taxes23,911 17,845 6,066 
Income tax expense (benefit)1,720 (1,309)3,029 
Net income (loss)$22,191 $19,154 $3,037 

Investment Overview

Activity for the three months ended March 31, 2023 included originating and funding $32.6 million in principal value of commercial mortgage loans, which was offset by $131.3 million of principal repayments. We acquired $3.5 million of new securities, which was offset by $60.2 million of amortization in the portfolio and $13.6 million of sales, which partially contributed to a net decrease in our securities portfolio of $67.5 million during the three months ended March 31, 2023. In addition, we purchased $1.0 billion of short-term U.S. treasury securities during the three months ended March 31, 2023, of which $574 million matured during the three months ended March 31, 2023.
Activity for the three months ended March 31, 2022 included originating and funding $703.4 million in principal value of commercial mortgage loans, which was offset by $349.9 million of principal repayments. We acquired $29.8 million of new securities, which was offset by $4.3 million of sales and $57.8 million of amortization in the portfolio, which partially contributed to a net decrease in our securities portfolio of $40.3 million during the three months ended March 31, 2022. We acquired, via change in control, a previously held interest in a non-controlling equity investment of $15.4 million of real estate and received proceeds from the sale of real estate of $79.4 million as a result of the sale of two investments.
Activity for the three months ended December 31, 2021 included originating and funding $1.1 billion in principal value of commercial mortgage loans and the purchase of $63.6 million in principal value of commercial mortgage loans, which were offset by $130.8 million of sales and $283.8 million of principal repayments. We acquired $82.5 million of new securities, which was partially offset by $73.6 million of sales and $28.7 million of amortization in the portfolio, which partially contributed to a net decrease in our securities portfolio of $21.5 million during the three months ended December 31, 2021. We also invested $38.0 million in real estate, which included $38.0 million of real estate acquired via foreclosure.

Operating Overview

Net income (loss) totaled $19.2 million for the three months ended March 31, 2022, compared to $27.1 million for the three months ended December 31, 2021. The most significant drivers of the $7.9 million decrease are as follows:

•an increase in total costs and expenses of $23.5 million, primarily attributable to a $19.0 million increase in compensation and employee benefits, a $2.3 million increase in real estate operating expenses, and $1.6 million increase in fee expense;

•an increase in total other income (loss) of $16.1 million, primarily as a result of a $10.5 million increase in realized gain on sale of real estate, net, a $4.4 million increase in fee and other income, and a $2.4 million increase in net results from derivative transactions, partially offset by a decrease of $2.7 million in sales of loans and a $0.8 million decrease as a result of realized gain on securities;

•a decrease in net interest income after provision for loan losses of $4.1 million, as a result of a $2.6 million release of provision partially offset by a $1.4 million net decline of net interest income comprised of a $3.2 million increase in interest income and a $4.6 million increase in interest expense; and

•an increase of $(3.5) million in income tax expense (benefit) compared to the prior year is primarily as a result of changes in forecasted GAAP income in our TRSs.

Income (Loss) Before Taxes

Income (loss) before taxes totaled $17.8 million for the three months ended March 31, 2022, compared to $29.3 million for the three months ended December 31, 2021. The significant components of the $11.5 million decrease in income before taxes are described in the first four bullet points under “Operating Overview” above.

Distributable Earnings

Distributable earnings, a non-GAAP financial measure, totaled $31.5 million for the three months ended March 31, 2022, compared to $27.7 million for the three months ended December 31, 2021. The significant components of the $3.8 million increase in distributable earnings are an increase of $7.6 million in the sale of real estate, net, an increase of $4.4 million in fee and other income and an increase of $2.1 million in real estate operating income. These increases were partially offset by an increase of $2.3 million in real estate operating expenses, a decrease of $2.2 million in sale of loans, net, a decrease of $1.4 million in net interest income after provision for loan losses comprised of a $3.2 million increase in interest income and a $4.6 million increase in interest expense, an increase of $2.0 million in compensation and employee benefits and a decrease of $0.8 million in gain (loss) on securities.

Refer to “—Reconciliation of Non-GAAP Financial Measures” for our definition of distributable earnings and a reconciliation to income (loss) before taxes.
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Net Interest Income
 
The $3.2$47.6 million increase in interest income was primarily attributable to an increaseincreases in prevailing interest rate benchmarks on our floating rate balance sheet loan and securities portfolios as a result ofand an increase in net originations.originations from our balance sheet first mortgage loans. For the three months ended March 31, 2023, the amortized cost of loan investments averaged $3.9 billion and the amortized cost of securities investments averaged $0.5 billion. For the three months ended March 31, 2022, securities investments averaged $732.4 million and loan investments averaged $3.8 billion. For the three months ended December 31, 2021,billion and securities investments averaged $0.8 billion and loan investments averaged $3.1$0.7 billion. There was a $58.7 million decrease in average securities, and a $0.7$0.1 billion increase in average loan investments and a $(0.2) billion decrease in average securities investments.

The $4.6$13.7 million increase in interest expense is primarily related to anhigher prevailing rates on our floating rate debt and higher outstanding balances on our loan repurchase facilities. The increase in interest expense was partially offset by the payoff of our Secured Financing Facility and reductions in the outstanding balances of our long-term mortgage loan debt, securities repurchase financing, and FHLB borrowings as well as a reduction in expense as a result of the December CLO debt issuances and defeasance costs paid as a resultredemptions of the sale of real estate.our Notes.

The decreaseincrease in net interest income before provision for loan losses of $1.4$33.9 million as explained above is explained in the paragraphs above.also attributable to a higher percentage of our owned assets being variable rate as compared to certain financing sources such as our unsecured bonds and our mortgage loan financing being fixed rate.

As of March 31, 2022,2023, the weighted average yield on our mortgage loan receivables was 5.4%9.1%, compared to 5.7%5.4% as of DecemberMarch 31, 2021 as the2022. The weighted average yield on new loans originated was lower thanincreased as a result of increases in the weighted average yield on loans that were securitized or paid off.prevailing interest rates. As of March 31, 2022,2023, the weighted average interest rate on borrowings against our mortgage loan receivables was 2.7%6.5%, compared to 2.6%2.7% as of DecemberMarch 31, 2021.2022. The increase in the rate on borrowings against our mortgage loan receivables from DecemberMarch 31, 20212022 to March 31, 20222023 was primarily due to rate increasesthe increase in prevailing interest rates. As of March 31, 2022,2023, we had outstanding borrowings secured by our mortgage loan receivables equal to 40.7%45.1% of the carrying value of our mortgage loan receivables, compared to 39.0%40.7% as of DecemberMarch 31, 2021.2022.

As of March 31, 2022,2023, the weighted average yield on our real estate securities was 2.0%5.6%, compared to 1.7%2.0% as of DecemberMarch 31, 2021.2022. As of March 31, 2022,2023, the weighted average interest rate on borrowings against our real estate securities was 1.0%5.2%, compared to 0.9%1.0% as of DecemberMarch 31, 2021.2022. The increase in the rate on borrowings against our real estate securities from DecemberMarch 31, 20212022 to March 31, 20222023 was primarily due to higher prevailing market borrowing rates as of March 31, 20222023 compared to DecemberMarch 31, 2021.2022. As of March 31, 2022,2023, we had outstanding borrowings secured by our real estate securities equal to 73.2%63.7% of the carrying value of our real estate securities, compared to 74.4%73.2% as of DecemberMarch 31, 2021.2022.
 
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 March 31, 2022, and December 31, 20212023, the weighted average interest rate on mortgage borrowings against our real estate was 5.7%, compared to 4.9%. as of March 31, 2022. As of March 31, 2022,2023, we had outstanding borrowings secured by our real estate equal to 76.5%67.8% of the carrying value of our real estate, compared to 77.9%76.5% as of DecemberMarch 31, 2021.2022.

Provision for (release of) Loan Loss Reserves

The provision for the three months ended March 31, 2023 was $4.7 million. The increase in provision associated with the general reserve during the three months ended March 31, 2023 is primarily due to adverse changes in macroeconomic scenarios.

The total change in reserve for provision for the three months ended March 31, 2022 was an increase in provision of $0.9 million. The increase representsrepresented an increase in the general reserve of loans held for investment of $0.6 million and an increase related to unfunded loan commitments of $0.3 million. The increase during the three months ended March 31, 2022 iswas primarily due to an overall increase in the size of our balance sheet first mortgage portfolio as a result of net originations during that time. For additional information, refer to “Allowance for Credit Losses and Non-Accrual Status” in Note 3, Mortgage Loan Receivables, toin the consolidated financial statements. The total change in reserve for provision for the three months ended December 31, 2021 was a reduction of $1.8 million which included in the release of $1.9 million general reserve on both loans held for investment and an addition of $0.1 million related unfunded commitments.

Real Estate Operating Income

The increasedecrease of $2.1$3.2 million in real estate operating income was primarily attributable to an increase in operations as a result of the easingtiming of restrictions in place due to COVID-19 partially offset bysix real estate sales.









sales that occurred after March 31, 2022.

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Net Result from Mortgage Loan Receivables Held for Sale of Loans, Net

Income (loss)Net result from mortgage loan receivables held for sale, of loans, net, includes all loan sales, whether by securitization, whole loan sales or other means. Income (loss)Net result from mortgage loan receivables held for sale of loans, net also includes unrealized losses on loans related to lower of cost or market adjustments. During the three months ended March 31, 2022,2023, we did not sell or transfer any balance sheet mortgage loans or conduit loans and recorded $0.9$0.2 million of realizedunrealized losses on loans related to lower of cost or market adjustments.adjustments on our conduit loans. During the three months ended DecemberMarch 31, 2021,2022, we sold/transferred 7did not sell any conduit loans with an aggregate outstanding principal balanceand recorded $ 0.9 million of $130.8 million and no balance sheet mortgage loan receivables held for investment, net, at amortized cost resulting in a gain of $1.7 million. During the three months ended December 31, 2021, we recorded no realized losses on loans related to lower of cost or market adjustments. 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.
 
Realized Gain (Loss) on Securities
 
The realized gain (loss)loss on securities for the three months ended March 31, 20222023 was $(0.1)$(0.3) million compared to a realized gainloss of $0.7$(0.1) million for DecemberMarch 31, 2021,2022, which resulted in a net negative change of $(0.8)$(0.2) million. For the three months ended March 31, 2023, we sold $10.7 million of CMBS securities. For the three months ended March 31, 2022, we sold $4.3 million of CMBS securities. For the three months ended December 31, 2021, we sold $73.6 million of securities, comprised of $49.2 million of CMBS and $24.4 million of agency securities.

Unrealized Gain (Loss) on Equity Securities

The Company had $14 thousand in unrealized gain (loss) during the three months ended March 31, 2022, and no sale activity for the three months ended December 31, 2021. The Company has elected the fair value option for accounting for these equity securities and changes in fair value are recorded in current period earnings.

Realized Gain (Loss) on Sale of Real Estate, Net
 
There was an increasea decrease of $10.5$29.2 million in realized gain (loss) on the sale of real estate, forwhich was a result of the timing of real estate sales. There were no sales of real estate during the three months ended March 31, 2022. The increase was primarily as2023 and a result of the sale of one office property for a realized gain of $14.5 million and one warehouse property for a realized gain of $14.6 million which resulted in an aggregate $29.2 million realized gain (loss) for the three months ended March 31, 2022. The realized gain (loss) of $18.6 million for the three months ended December 31, 2021 consisted of gains on the sale of three net lease properties for a realized gain of $20.6 million offset by a realized loss on a land parcel of $2.0 million.

Fee and Other Income
 
We generatedgenerate fee income from origination fees, exit fees and other fees on the loans we originate and in which we invest, and dividend income on our FHLB stock. The $4.4$5.4 million increasedecrease in fee and other income was primarily due to an increasedriven by a decrease in exit fees and defeasance cost reimbursements as a result of ourthe sale of real estate, sales.partially offset by an increase in dividends from FHLB stock.

Net Result from Derivative Transactions
 
Net result from derivative transactions of $3.1$(2.2) million is composed of a realized gainlosses of $3.3$1.8 million and an unrealized loss of $0.2$0.4 million for the three months ended March 31, 2023, compared to a net gain of $3.1 million for the three months ended March 31, 2022, compared to a gain of $0.7 million for the three months ended December 31, 2021, which was comprised of an unrealized gain of $0.2 million and a realized gain of $0.5$3.3 million and a $0.2 million unrealized loss resulting in a negative change of $5.4 million. The hedge positions were relatedprimarily 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 and interest rate swap 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 gainloss in 20222023 was primarily related to movement in interest rates during the three months ended March 31, 2022.2023. 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.
 
Earnings (Loss) from Investment in Unconsolidated Joint Ventures
 
Earnings from our investment in Grace Lake LLC totaled $0.4$0.2 million and $0.4 million for the three months ended March 31, 2023 and 2022, and December 31, 2021, respectively. See Note 6, Investment in and Advances to Unconsolidated Joint Ventures, for further detail. Our maximum exposure to loss from these investments is limited to the carrying value of our investments.

Gain (Loss) on Extinguishment of Debt

Gain (loss) on extinguishment of debt totaled $9.2 million for the three months ended March 31, 2023. During the three months ended March 31, 2023, the Company retired: (i) $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; (ii) $36.4 million of principal of the 2027 Notes for a repurchase price of $29.7 million, recognizing a $6.4 million net gain on extinguishment of debt after recognizing $(288) thousand of unamortized debt issuance costs associated with the retired debt; and (iii) $6.1 million of principal of the 2029 Notes for a repurchase price of $4.6 million, recognizing a $1.4 million net gain on extinguishment of debt after recognizing $(76) thousand of unamortized debt issuance costs associated with the retired debt. There was no gain (loss) on extinguishment of debt for the three months ended March 31, 2022.
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Compensation and Employee Benefits

Compensation and employee benefits are comprised primarily of salaries, bonuses, equity basedequity-based compensation and other employee benefits. The increasedecrease of $19.0$7.8 million in compensation expense wasis primarily attributabledue to the timing of the payment of annuala decrease in equity based compensation for the three months ended March 31, 2022 compared to the three months ended December 31, 2021.compensation.

Operating Expenses

Operating expenses are primarily composedcomprised of professional fees, lease expense and technology expenses. The increasedecrease during the three months ended March 31, 20222023 as compared to the three months ended DecemberMarch 31, 20212022 of $0.7$0.3 million was primarily related to a decrease in legal and technology expenses partially offset by an increase in other professional fees.

Real Estate Operating Expenses

The increase during the three months ended March 31, 20222023 as compared to the three months ended DecemberMarch 31, 20212022 of $2.3$0.9 million in real estate operating expense is primarily the result of increases in expenses related to the foreclosure of and acquisition of assets.increased hotel operations.
 
Fee Expense
 
Fee expense is comprised primarily of custodian fees, financing costs and servicing fees related to loans. The increasedecrease during the three months ended March 31, 20222023 as compared to the three months ended DecemberMarch 31, 20212022 of $1.6$0.5 million was primarily attributable to an increase in servicing fees driven by an increase in the loan portfolio and an increase in other professional fees, offset by a decrease in financing costs.deal related expenses.
 
Depreciation and Amortization
 
The $(0.1)$1.8 million decrease during the three months ended March 31, 20222023 as compared to the three months ended DecemberMarch 31, 20212022 in depreciation and amortization is primarily attributable to the timing of the six real estate sales and acquisitions during each quarter.one acquisition that occurred after March 31, 2022.
 
Income Tax (Benefit) Expense
 
Most of our consolidated income tax provision related to the business units held in our TRSs. The increase in benefit during the three months ended March 31, 2022 compared to the three months ended December 31, 2021expense of $3.5 million is primarily a result of a changes in forecasted GAAP income in our TRSs.
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Three months ended March 31, 2022 compared to the three months ended March 31, 2021

Investment Overview
Activity for the three months ended March 31, 2022 included originating and funding $0.7 billion in principal value of commercial mortgage loans, which was offset by $0.3 billion of principal repayments. We acquired $29.8 million of new securities, which was offset by $4.3 million of sales and $57.8 million of amortization in the portfolio, which partially contributed to a net decrease in our securities portfolio of $40.3$3.0 million during the three months ended March 31, 2022. We acquired $15.4 million in real estate and received proceeds from the sale of real estate of $79.4 million2023 as a result of the sale of two investments.
Activity for the three months ended March 31, 2021 included originating and funding $157.6 million in principal value of commercial mortgage loans, which was offset by $46.6 million of sales and $374.8 million of principal repayments. We acquired $40.0 million of new securities, which was partially offset by $329.1 million of sales and $10.5 million of amortization in the portfolio, which partially contributed to a net decrease our securities portfolio of $294.2 million during the three months ended March 31, 2021. We also invested $43.8 million in real estate, which included $43.8 million of real estate acquired via foreclosure, and received proceeds from the sale of real estate of $43.8 million.

Operating Overview

Net income (loss) totaled $19.2 million for the three months ended March 31, 2022, compared to $0.4 million for the three months ended March 31, 2021. The most significant drivers of the $18.7 million increase are as follows:

•an increase in total other income (loss) of $32.0 million, primarily as a result of a $29.2 million increase in realized gain on sale of real estate, net, a $3.9 million increase in fee and other income, and a $2.2 million increase in real estate operating revenues, partially offset by a $1.6 million decrease in net results from derivative transactions and a $0.7 million decrease as a result of realized gain on securities;

•an increase in net interest income after provision for loan losses of $10.7 million, as a result of an increase in net interest income of $15.9 million comprised of a $16.9 million increase in interest income and a $1.1 million increase in interest expense, partially offset by a $5.1 million movement in provision for loan loss as a result of a $4.3 million release for the three months ended March 31, 2021 versus a $0.9 million addition for the three months ended March 31, 2022;

•an increase in total costs and expenses of $24.6 million, primarily attributable to a $20.3 million increase in compensation and employee benefits, a $2.8 million increase in real estate operating expenses and a $1.3 million increase in operating expenses; and

•an increase of $(0.5) million in income tax expense (benefit) primarily as a result of reduced income in our TRSs.

Income (Loss) Before Taxes

Income (loss) before taxes totaled $17.8 million for the three months ended March 31, 2022, compared to $(0.3) million for the three months ended March 31, 2021. The significant components of the $18.3 million increase in income before taxes are described in the first four bullet points under “Operating Overview” above.

Distributable Earnings

Distributable earnings, a non-GAAP financial measure, totaled $31.5 million for the three months ended March 31, 2022, compared to $3.2 million for the three months ended March 31, 2021. The significant components of the $28.3 million increase are primarily as a result of an increase of $15.9 million in net interest income after provision for loan losses comprised of a $16.9 million increase in interest income and a $1.1 million increase in interest expense, an increase in realized gain on sale of $14.3 million real estate, net, an increase in fee and other income of $3.9 million, an increase in real estate operating revenues of $2.2 million, and an increase in net results from derivative transactions of $2.0 million. These increases were partially offset by an increase of $5.2 million in compensation and employee benefits, an increase in real estate operating expenses of $2.8 million and an increase in operating expenses of $1.3 million.

Refer to “—Reconciliation of Non-GAAP Financial Measures” for our definition of distributable earnings and a reconciliation to income (loss) before taxes.
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Net Interest Income
The $16.9 million increase in interest income was primarily attributable to an increase in net originations from our balance sheet first mortgage loans and increases in prevailing rate benchmarks. For the three months ended March 31, 2022, securities investments averaged $732.4 million and loan investments averaged $3.8 billion. For the three months ended March 31, 2021, securities investments averaged $791.1 million and loan investments averaged $2.2 billion. There was a $58.7 million decrease in average securities, and a $1.6 billion increase in average loan investments.

The $1.1 million increase in interest expense is primarily related to an increase in interest expense as a result of the July and December CLO debt issuances and defeasance costs paid as a result of the sale of real estate, partially offset by the paydown of the Company’s corporate revolver, secured financing facility and securities repurchase facility.

The increase in net interest income before provision for loan losses of $15.9 million is explained in the paragraphs above.

As of March 31, 2022, the weighted average yield on our mortgage loan receivables was 5.4%, compared to 6.0% as of March 31, 2021 as the weighted average yield on new loans originated was lower than the weighted average yield on loans that were securitized or paid off. As of March 31, 2022, the weighted average interest rate on borrowings against our mortgage loan receivables was 2.7%, compared to 5.9% as of March 31, 2021. The decrease in the rate on borrowings against our mortgage loan receivables from March 31, 2021 to March 31, 2022 was primarily due to the utilization of new sources of financing at lower borrowing rates obtained and held during the twelve months ended March 31, 2022. As of March 31, 2022, we had outstanding borrowings secured by our mortgage loan receivables equal to 40.7% of the carrying value of our mortgage loan receivables, compared to 32.6% as of March 31, 2021.

As of March 31, 2022, the weighted average yield on our real estate securities was 2.0%, compared to 1.7% as of March 31, 2021. As of March 31, 2022, the weighted average interest rate on borrowings against our real estate securities was 1.0%, compared to 0.9% as of March 31, 2021. The increase in the rate on borrowings against our real estate securities from March 31, 2021 to March 31, 2022 was primarily due to higher prevailing market borrowing rates as of March 31, 2022 compared to March 31, 2021. As of March 31, 2022, we had outstanding borrowings secured by our real estate securities equal to 73.2% of the carrying value of our real estate securities, compared to 81.9% as of March 31, 2021.
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 March 31, 2022, the weighted average interest rate on mortgage borrowings against our real estate was 4.9%, compared to 4.8% as of March 31, 2021. As of March 31, 2022, we had outstanding borrowings secured by our real estate equal to 76.5% of the carrying value of our real estate, compared to 78.3% as of March 31, 2021.

Provision for (release of) Loan Loss Reserves

The total change in reserve for provision for the three months ended March 31, 2022 was an increase in provision of $0.9 million. The increase represents an increase in the general reserve of loans held for investment of $0.6 million and an increase related to unfunded loan commitments of $0.3 million. The increase during the three months ended March 31, 2022 is primarily due to an overall increase in the size of our balance sheet first mortgage portfolio as a result of net originations during that time. For additional information, referincreases to “Allowance for Credit Losses and Non-Accrual Status” in Note 3, Mortgage Loan Receivables, to the consolidated financial statements. The total change in reserve for provision for the three months ended March 31, 2021 was a release of $4.3 million. The release represents a decline in the general reserve of loans held for investment of $4.2 million and the release on unfunded loan commitments of $0.1 million. The release during the year is primarily due to an improvement in macro economic assumptions. For additional information, refer to “Allowance for Credit Losses and Non-Accrual Status” in Note 3, Mortgage Loan Receivables to the consolidated financial statements.

Real Estate Operating Income

The increase of $2.2 million in real estate operating income was primarily attributable to an increase in operations as a result of the easing of restrictions in place due to COVID-19 and additions to our real estate portfolio, partially offset by real estate sales.





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Sale of Loans, Net

Income (loss) from sale of loans, net, includes all loan sales, whether by securitization, whole loan sales or other means. Income (loss) from sale of loans, net also includes unrealized losses on loans related to lower of cost or market adjustments. During the three months ended March 31, 2022, we did not sell or transfer any balance sheet mortgage loans or conduit loans and recorded $0.9 million of realized losses on loans related to lower of cost or market adjustments. During the three months ended March 31, 2021, we sold/transferred one conduit loan with an aggregate outstanding principal balance of $46.6 million and had no sale activity related to balance sheet mortgage loan receivables held for investment, net, at amortized cost. During the three months ended March 31, 2021, we recorded no realized losses on loans related to lower of cost or market adjustments. 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.
Realized Gain (Loss) on Securities
The realized gain (loss) on securities for the three months ended March 31, 2022 was $0.1 million compared to a realized loss of $0.6 million for March 31, 2021, which resulted in a net positive change of $0.7 million. For the three months ended March 31, 2022, we sold $4.3 million of CMBS securities. For the three months ended March 31, 2021, we sold $329.1 million of securities, comprised of $323.1 million of CMBS, and $6.0 million of U.S. Agency securities.
Unrealized Gain (Loss) on Equity Securities

The Company had $14 thousand in unrealized gain (loss) during the three months ended March 31, 2022, and no sale activity for the three months ended March 31, 2021. The Company has elected the fair value option for accounting for these equity securities and changes in fair value are recorded in current period earnings.

Realized Gain (Loss) on Sale of Real Estate, Net
There was an increase of $29.2 million in realized gain (loss) on the sale of real estate. The increase was a result of the sale of one office property for a realized gain of $14.5 million and one warehouse property for a realized gain of $14.6 million, which resulted in an aggregate $29.2 million realized gain (loss) for the three months ended March 31, 2022. We had one hotel property sale which resulted in no gain (loss) for the three months ended March 31, 2021.

Fee and Other Income
We generated fee income from origination fees, exit fees and other fees on the loans we originate and in which we invest, and dividend income on our FHLB stock. The $3.9 million increase in fee and other income primarily due to a increase in exit fees and defeasance cost reimbursements as a result of our real estate sales, offset by a decrease in dividend income.

Net Result from Derivative Transactions
Net result from derivative transactions of $3.1 million is composed of a realized gain of $3.3 million and an unrealized loss of $0.2 million for the three months ended March 31, 2022, compared to a gain of $4.8 million for the three months ended March 31, 2021, which was comprised of an immaterial unrealized gain and a realized gain of $4.8 million resulting in a negative change of $1.6 million. The hedge positions were related to fixed rate conduit loans and securities investments. The derivative positions that generated these results were a combination of treasury rate futures that we employed in an effort to hedge the interest rate risk 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 in 2022 was primarily related to movement in interest rates during the three months ended March 31, 2022. 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.
Earnings (Loss) from Investment in Unconsolidated Joint Ventures
Earnings from our investment in Grace Lake LLC totaled $0.4 million, and $0.3 million for the three months ended March 31, 2022 and 2021, respectively. Earnings (loss) from our investment in 24 Second Avenue totaled $0.0 million and $0.1 million for the three months ended March 31, 2022 and 2021, respectively. See Note 6, Investment in and Advances to Unconsolidated Joint Ventures, for further detail. Our maximum exposure to loss from these investments is limited to the carrying value of our investments.

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Compensation and Employee Benefits

Compensation and employee benefits are comprised primarily of salaries, bonuses, equity based compensation and other employee benefits. The increase of $20.3 million in compensation expense was primarily attributable to the timing of employee stock based compensation that was granted in December 2020 and therefore not during the three months ended March 31, 2021. This resulted in a higher total compensation expense during March 31, 2022 as compared to March 31, 2021.

Operating Expenses

Operating expenses are primarily composed of professional fees, lease expense and technology expenses. The increase during the three months ended March 31, 2022 as compared to March 31, 2021 of $1.3 million was primarily related to a increase in professional fees.

Real Estate Operating Expenses

The increase during the three months ended March 31, 2022 as compared to March 31, 2021 of $2.8 million in real estate operating expense is primarily the result of increases in expenses related to the foreclosure of and acquisition of assets and an increase in hotel operations partially offset by real estate sales.
Fee Expense
Fee expense is comprised primarily of custodian fees, financing costs and servicing fees related to loans. The increase during the three months ended March 31, 2022 as compared to March 31, 2021 of $0.4 million was primarily attributable to an increase in servicing fees driven by an increase in the loan portfolio and an increase in other professional fees, offset by a decrease in financing costs.
Depreciation and Amortization
The $0.2 million decrease during the three months ended March 31, 2022 as compared to March 31, 2021 in depreciation and amortization is primarily attributable to the timing of the real estate sales and acquisitions during each quarter.
Income Tax (Benefit) Expense
Most of our consolidated income tax provision related to the business units held in our TRSs. The increase during the three months ended March 31, 2022 as compared to March 31, 2021 in benefit of $0.5 million is primarily a result of reducedGAAP income in our TRSs.


Liquidity and Capital Resources
 
The management of our liquidity and capital diversity and allocation strategies is critical to the success and growth of our business. We manage our sources of liquidity to complement our asset composition and to diversify our exposure across multiple capital markets and counterparties.
 
We require substantial amounts of capital to support our business. The management team, in consultation with our board of directors, establishes our overall liquidity and capital allocation strategies. A key objective of those strategies is to support the execution of our business strategy while maintaining sufficient ongoing liquidity throughout the business cycle to service our financial obligations as they become due. When making funding and capital allocation decisions, members of our senior management considerconsider: business performance; the availability of, and costs and benefits associated with, different funding sources; current and expected capital markets and general economic conditions; our asset composition and capital structure; and our targeted liquidity profile and risks relating to our funding needs.

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To ensure that Ladder Capital can effectively address the funding needs of the Company on a timely basis, we maintain a diverse array of liquidity sources includingincluding: (1) cash and cash equivalents; (2) cash generated from operations; (3) proceeds from the issuance of the unsecured bonds; (4) borrowings under repurchase agreements; (5) principal repayments on investments including mortgage loans and securities; (6) borrowings under our revolving credit facility;Revolving Credit Facility; (7) proceeds from securitizations and sales of loans; (8) proceeds from the sale of securities; (9) proceeds from the sale of real estate; (10) proceeds from the issuance of CLO debt and other non-mark-to-market loan financing; and (11) proceeds from the issuance of equity capital. We use these funding sources to meet our obligations on a timely basis and have the ability to use our significant unencumbered asset base to further finance our business.
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Our primary uses of liquidity are forfor: (1) the funding of loan, and real estate-related and securities investments; (2) the repayment of short-term and long-term borrowings and related interest; (3) the funding of our operating expenses; and (4) distributions to our equity investors to comply with the REIT distribution requirements. We require short-term liquidity to fund loans that we originate and hold on our consolidated balance sheet pending sale, including through whole loan sale, participation, or securitization. We generally require longer-term funding to finance the loans and real estate-related investments that we hold for investment. We have historically used the aforementioned funding sources to meet the operating and investment needs as they have arisen and have been able to do so by applying a rigorous approach to long and short-term cash and debt forecasting.

In addition, as a REIT, we are also required to make sufficient dividend payments to our shareholders in amounts at least sufficient to maintain our REIT status. Under IRS guidance, we may elect to pay a portion of our dividends in stock, subject to a cash/stock election by our shareholders, to optimize our level of capital retention. Accordingly, our cash requirement to pay dividends to maintain REIT status could be substantially reduced at the discretion of the board.
 
Our principal debt financing sources include: (1) long-term senior unsecured notes in the form of corporate bonds; (2) CLO issuances; (3) borrowings on both a short- and long-term committed basis, made by Tuebor from the FHLB; (4) long term non-recourse mortgage financing; (5) committed secured funding provided by banks and other lenders; and (6)(4) long term non-recourse mortgage financing; (5) uncommitted secured funding sources, including asset repurchase agreements with a number of banks.banks; and (6) secured advances from the FHLB through our captive insurance company.
 
In the future, we may also use other sources of financing to fund the acquisition of our assets, including credit facilities, warehouse facilities, repurchase facilities and other secured and unsecured forms of borrowing. These financings may be collateralized or non-collateralized, may involve one or more lenders and may accrue interest at either fixed or floating rates. We may also seek to raise further equity capital or issue debt securities in order to fund our future investments.

Refer to “Financial Covenants” and “Our Financing Strategies” for further disclosure of our diverse financing sources and, for a summary of our financial obligations, refer to the Contractual Obligations table below. All of our existing financial obligations due within the following year can be extended for one or more additional years at our discretion, refinanced or repaid at maturity or are incurred in the normal course of business (i.e., interest payments/loan funding obligations).

Cash, Cash Equivalents and Restricted Cash
 
We held cash, cash equivalents and restricted cash of $495.2$651.3 million at March 31, 2022,2023, of which $431.8$626.1 million was unrestricted cash and cash equivalents and $63.5$25.2 million was restricted cash. In addition, we held $109.7 million of U.S. Treasury securities traded and not yet settled within other assets on our consolidated balance sheet at March 31, 2023. We held cash and cash equivalents of $548.7$609.1 million and restricted cash of $72.8$50.5 million as of December 31, 2021. As the COVID-19 crisis evolved in 2020, management implemented a plan to mitigate the uncertainty in financial markets by increasing liquidity and obtaining additional non-recourse and non-mark-to-market financing. The additional liquidity was redeployed into new investments in 2021 and the first quarter of 2022.

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Cash Flows

The following table provides a breakdown of the net change in our cash, cash equivalents, and restricted cash ($ in thousands):
Three Months Ended March 31,Three Months Ended December 31, Three Months Ended March 31,
202220212021 20232022
Net cash provided by (used in) operating activitiesNet cash provided by (used in) operating activities$(30,035)$(43,590)$53,876 Net cash provided by (used in) operating activities$111,410 $(30,035)
Net cash provided by (used in) investing activitiesNet cash provided by (used in) investing activities(171,936)688,739 (718,780)Net cash provided by (used in) investing activities188,264 (171,936)
Net cash provided by (used in) financing activitiesNet cash provided by (used in) financing activities75,649 (477,374)442,918 Net cash provided by (used in) financing activities(198,262)75,649 
Net increase (decrease) in cash, cash equivalents and restricted cashNet increase (decrease) in cash, cash equivalents and restricted cash$(126,322)$167,775 $(221,986)Net increase (decrease) in cash, cash equivalents and restricted cash$101,412 $(126,322)

Three months ended March 31, 2023

We experienced a net increase in cash, cash equivalents and restricted cash of $101.4 million for the three months ended March 31, 2023, reflecting cash provided by operating activities of $111.4 million, cash provided by investing activities of $188.3 million and cash used in financing activities of $(198.3) million.

Net cash provided by operating activities of $111.4 million was primarily driven by $109.7 million of U.S. Treasury securities with maturities of less than three months that were traded and not yet settled, and net interest income and increases in net operating income on our real estate portfolio.

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Net cash provided by investing activities of $188.3 million was driven by $150.2 million of repayment from mortgage loan receivables, $60.2 million in repayments on securities, and $13.6 million of proceeds from sale of securities, partially offset by $(32.6) million of origination of mortgage loans held for investment and $(3.5) million in purchases of securities.

Net cash used in financing activities of $(198.3) million was primarily as a result of net repayments of borrowings of $(156.4) million, $(30.4) million of dividend payments, $(7.9) million of shares acquired to satisfy minimum federal and state tax withholdings on restricted stock, $(2.3) million purchase of treasury stock, and $(0.8) million in deferred financing cost.

Three months ended March 31, 2022

We experienced a net decrease in cash, cash equivalents and restricted cash of $(126.3) million for the three months ended March 31, 2022, reflecting cash used in operating activities of $(30.0) million, cash provided by investing activities of $(171.9) million and cash used in financing activities of $75.6 million.

Net cash used in operating activities of $(30.0) million was primarily driven by $(54.8) million of originations of mortgage loans held for sale, offset by increases in net interest income and increases in net operating income on our real estate portfolio.

Net cash used in investing activities of $(171.9) million was driven by usage of $(648.5) million of origination of mortgage loans held for investment and $(26.0) million in purchases of real estate securities. These uses were partially offset by $358.2 million of repayment from mortgage loan receivables, $79.5 million proceeds from the sale of real estate, $57.8 million in repayments on securities, and $4.3 million of proceeds from the sale of real estate securities.

Net cash provided by financing activities of $75.6 million was primarily as a result of net borrowings of $115.4 million partially offset by $(26.1) million of dividend payments, $(11.3) million of shares acquired to satisfy minimum federal and state tax withholdings on restricted stock, and $(1.5) million in deferred financing costs.

Three months ended March 31, 2021

We experienced a net increase in cash, cash equivalents and restricted cash of $167.8 million for the three months ended March 31, 2021 reflecting cash used in operating activities of $(43.6) million, cash provided by investing activities of $688.7 million and cash used in finance activities of $(477.4) million.

Net cash used in operating activities of $(43.6) million was primarily driven by $(41.0) million of originations of mortgage loans held for sale and decreases in net interest income.

Net cash provided by investing activities of $688.7 million was driven by $394.4 million of repayment from mortgage loan receivables, $329.1 million of proceeds from sale of real estate securities, $46.6 million of proceeds from the sale of mortgage loan receivables held for investment and $43.8 million proceeds from the sale of real estate, partially offset by $(40.0) million in purchases of real estate securities and $(116.6) million of origination of mortgage loans held for investment.

Net cash used in financing activities of $(477.4) million was primarily as a result of net borrowings of $(445.6) million, $(26.2) million of dividends payments, $(4.4) million of shares acquired to satisfy minimum federal and state tax withholdings on restricted stock and $(0.6) million in deferred financing costs.

Three months ended December 31, 2021

We experienced a net decrease in cash, cash equivalents and restricted cash of $(222.0) million for the three months ended December 31, 2021 reflecting cash provided by operating activities of $53.9 million, cash used in investing activities of $(718.8) million and cash provided by financing activities of $442.9 million.

Net cash provided by operating activities of $53.9 million was primarily driven by $132.5 million of proceeds from the sale of loans, and increases in net interest income and net increases in operating income on our real estate portfolio.

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Net cash used in investing activities of $(718.8) million was driven by $(1.0) billion of origination of mortgage loans receivable held for investment, $(103.1) million of purchase of real estate securities and $(63.6) million of purchases of mortgage loans receivable held for investment, partially offset by $305.8 million of repayment from mortgage loan receivables, $73.6 million of proceeds from the sales of real estate securities, $55.7 million of proceeds of the sale of real estate and $28.7 million of repayments of real estate securities.

Net cash provided by financing activities of $442.9 million was primarily a result of net borrowings of $468.3 million partially offset by $(24.7) million of dividend payments.

Unencumbered Assets

As of March 31, 2022,2023, we held unencumbered cash of $431.8$626.1 million, unencumbered loans of $1.8$1.6 billion, unencumbered securities of $132.2$138.7 million, unencumbered real estate of $99.3$170.2 million and $343.1$359.8 million of other assets not secured by any portion of secured indebtedness. As of December 31, 2021,2022, we held unencumbered cash of $0.5 billion,$609.1 million, unencumbered loans of $1.7 billion, unencumbered securities of $150.9$97.5 million, unencumbered real estate of $85.9$140.3 million and $358.5$351.6 million of other assets not secured by any portion of secured indebtedness.

Borrowings under various financing arrangements

Our financing strategies are critical to the success and growth of our business. We manage our leverage policies to complement our asset composition and to diversify our exposure across multiple counterparties. Our borrowings under various financing arrangements as of March 31, 20222023 are set forth in the table below ($ in thousands):
March 31, 20222023
Committed loan repurchase facilities$412,308651,224 
Committed securities repurchase facility28,8398,032 
Uncommitted securities repurchase facilities193,561110,011 
Total repurchase facilities634,708769,267 
Revolving credit facility— 
Mortgage loan financing(1)648,666469,690 
Secured financing facility(2)109,630 
CLO debt(3)debt(2)1,055,4021,059,593 
Borrowings from the FHLB263,000213,000 
Senior unsecured notes(4)notes(3)1,631,9051,570,878 
Total debt obligations, net$4,343,3114,082,428 
(1)Presented net of unamortized debt issuance costs of $0.3$1.7 million as of March 31, 2022.2023.
(2)Presented net of unamortized debt issuance costs of $0.3$4.8 million and an unamortized discountas of $0.3 million related to the Purchase Right (described in detail under Secured Financing Facility below) at March 31, 2022.2023.
(3)Presented net of unamortized debt issuance costs of $9.0$14.2 million as of March 31, 2022.
(4)Presented net of unamortized debt issuance costs of $17.9 million as of March 31, 2022.2023.

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The Company’s repurchase facilities include covenants covering minimum net worth requirements (ranging from $400.0 million to $871.4 million), maximum reductions in net worth over stated time periods, 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), maximum leverage ratios (calculated in various ways based on specified definitions of indebtedness and net worth) and a fixed charge coverage ratio of 1.25x, and, in the instance of one lender, an interest coverage ratio of 1.50x, in each case, if certain liquidity thresholds are not satisfied. We were in compliance with all covenants as of March 31, 20222023 and December 31, 2021.2022. 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.

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Committed loan facilities

We are a party to multiple committed loan repurchase agreement facilities, totaling $1.3$1.2 billion of credit capacity. As of March 31, 2022,2023, the Company had $412.3$651.2 million of borrowings outstanding, with an additional $0.9 billion$548.8 million of committed financing available. As of December 31, 2021,2022, the Company had $184.5$616.9 million of borrowings outstanding, with an additional $1.0 billion$683.1 million of committed financing available. Assets pledged as collateral under these facilities are generally limited to whole mortgage loans collateralized by first liens on commercial real estate, mezzanine loans collateralized by equity interests in entities that own commercial real estate, and certain interests in such first mortgage and mezzanine loans. Our repurchase facilities include covenants covering net worth requirements, minimum liquidity levels, and maximum debt/equity ratios. We believe we were in compliance with all covenants as of March 31, 2022.2023.

We have the option to extend some of our existing facilities subject to a number of customary conditions. The lenders have sole discretion with respect to the inclusion of collateral in these facilities, to determine the market value of the collateral on a daily basis, and, if the estimated market value of the included collateral declines, the lenders have the right to require additional collateral or a full and/or partial repayment of the facilities (margin call), sufficient to rebalance the facilities. Typically, the facilities are established with stated guidelines regarding the maximum percentage of the collateral asset’s market value that can be borrowed. We often borrow at a lower percentage of the collateral asset’s value than the maximum leaving us with excess borrowing capacity that can be drawn upon at a later date and/or applied against future margin calls so that they can be satisfied on a cashless basis.

Committed securities facility
 
We are a party to a term master repurchase agreement with a major U.S. banking institution for CMBS, totaling $400.0$100.0 million of credit capacity, or more depending on our utilization of a loan repurchase facility with the same lender.capacity. As we do in the case of borrowings under committed loan facilities, we often borrow at a lower percentage of the collateral asset’s value than the maximum, leaving us with excess borrowing capacity that can be drawn upon a later date and/or applied against future margin calls so that they can be satisfied on a cashless basis. As of March 31, 2022,2023, the Company had $28.8$8.0 million borrowings outstanding, with an additional $606.3$92.0 million of committed financing available. As of December 31, 2021,2022, the Company had $44.1$8.6 million of borrowings outstanding, withand an additional $818.7$91.4 million of committed financing available.

Uncommitted securities facilities

We are a party to multiple master repurchase agreements with several counterparties to finance our investments in CMBS and U.S. Agency securities. The securities that served as collateral for these borrowings are highly liquid and marketable assets that are typically of relatively short duration.
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Revolving credit facility
 
The Company’s revolving credit facility (the “Revolving(“Revolving Credit Facility”) provides for an aggregate maximum borrowing amount of $266.4$323.9 million, including a $25.0 million sublimit for the issuance of letters of credit. The Revolving Credit Facility is available on a revolving basis to finance the Company’s working capital needs and for general corporate purposes. TheOn July 27, 2022, the Company amended its Revolving Credit Facility has a currentto increase the maximum borrowing amount to $323.9 million, extend the maturity date of February 11,to July 27, 2023 which may be extended by three 12-month periods subjectwith four additional one-year extension options, and reduce the interest rate to the satisfactionsum of customary conditions, includingone-month Term SOFR plus a fixed margin of 2.50%. The amendment also provides for reductions in the absencefixed margin upon the achievement of default. The Interestinvestment grade credit ratings. As of March 31, 2023, the Company had no outstanding borrowings on the Revolving Credit Facility, is one-month LIBOR plus 3.00% per annum payable monthly in arrears.but still maintains the ability to draw $323.9 million. There were no outstanding draws on the facility as of March 31, 2022 andat December 31, 2021.2022.

The obligations under the Revolving Credit Facility are guaranteed by the Company and certain of its subsidiaries. The Revolving Credit Facility is secured by a pledge of the shares of (or other ownership or equity interests in) certain subsidiaries to the extent the pledge is not restricted under existing regulations, law or contractual obligations.

LCFHThe Company is subject to customary affirmative covenants and negative covenants, including limitations on the incurrence of additional debt, liens, restricted payments, sales of assets and affiliate transactions under the Revolving Credit Facility.transactions. In addition, under the Revolving Credit Facility, LCFHCompany is required to comply with financial covenants relating to minimum net worth, maximum leverage, minimum liquidity, and minimum fixed charge coverage, consistent with our other credit facilities. OurThe Company’s ability to borrow under the Revolving Credit Facility will beis dependent on, among other things, LCFH’s compliance with the financial covenants. The Revolving Credit Facility contains customary events of default, including non-payment of principal or interest, fees or other amounts, failure to perform or observe covenants, cross-default to other indebtedness, the rendering of judgments against the Company or certain of our subsidiaries to pay certain amounts of money and certain events of bankruptcy or insolvency.
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Mortgage Loan Financing
 
We generally finance our real estate using long-term non-recourse mortgage financing. During the yearthree months ended March 31, 2022,2023, we did not execute any term debt agreement to finance real estate. TheseOur non-recourse debt agreements provide for primarily fixed rate financing at rates ranging from 3.75%4.25% to 6.16%8.53%, with anticipated maturity dates between 2022-20312024-2031 and an average term of 3.9 years as of March 31, 2022.2023. These loans have carrying amounts of $648.7$469.7 million and $693.8$498.0 million, net of unamortized premiums of $2.8$2.3 million and $3.2$2.4 million as of March 31, 20222023 and December 31, 2021,2022, respectively, 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. The Company recorded $0.3$0.2 million and $0.3 million of premium amortization, which decreased interest expense for the three months ended March 31, 2022,2023 and March 31, 2021,2022, respectively. The mortgage loans are collateralized by real estate and related lease intangibles, net, of $749.0$523.0 million and $805.0$559.9 million as of March 31, 20222023 and December 31, 2021,2022, respectively.

Secured Financing Facility

On April 30, 2020, the Company entered into a strategic financing arrangement with an American multinational corporation (the “Lender”), under which the Lender provided the Company with approximately $206.4 million in senior secured financing (the “Secured Financing Facility”) to fund transitional and land loans. The Secured Financing Facility, secured on a first lien basis on a portfolio of certain of the Company’s loans, will mature on May 6, 2023, and borrowings thereunder bear interest at LIBOR (or a minimum of 0.75% if greater) plus 10.0%, with a minimum interest premium clause, of which approximately $2.0 million remains as of March 31, 2022. The Secured Financing Facility is non-recourse, subject to limited exceptions, and does not contain mark-to-market provisions. Additionally, the Secured Financing Facility provides the Company optionality to modify or restructure loans or forbear in exercising remedies, which maximizes the Company’s financial flexibility.

As part of the strategic financing, the Lender also had the ability to make an equity investment in the Company of up to 4.0 million Class A common shares at $8.00 per share, subject to certain adjustments (the “Purchase Right”). The Purchase Right was exercised in full at $8.00 per share on December 29, 2020. In addition, the Lender has agreed not to sell, transfer, assign, pledge, hypothecate, mortgage, dispose of or in any way encumber the shares acquired as a result of exercising the Purchase Right for a period of time following the exercise date. In connection with the issuance of the Purchase Right, the Company and the Lender entered into a registration rights agreement, pursuant to which the Company has agreed to provide customary demand and piggyback registration rights to the Lender.

The Purchase Right was classified as equity and the $200.9 million of net proceeds from the original issuance were allocated $192.5 million to the originally issued debt obligation and $8.4 million to the Purchase Right using the relative fair value method. The commitment to issue shares will not be subsequently remeasured. The $8.4 million allocated to the Purchase Right is being treated as a discount to the debt and amortized over the life of the Purchase Right to interest expense.

As of March 31, 2022, the Company had $109.6 million of borrowings outstanding under the secured financing facility included in debt obligations on its consolidated balance sheets, net of unamortized debt issuance costs of $0.3 million and a $0.3 million unamortized discount related to the Purchase Right.

As of December 31, 2021, the Company had $132.4 million of borrowings outstanding under the Secured Financing Facility
included in debt obligations on its consolidated balance sheets, net of unamortized debt issuance costs of $1.9 million and a
$2.1 million unamortized discount related to the Purchase Right

Collateralized Loan Obligations (“CLO”) Debt

On July 13, 2021, a consolidated subsidiary of the Company completed a privately-marketed CLO transaction, which generated $498.2 million of gross proceeds to Ladder, financing $607.5 million of loans (“Contributed July 2021 Loans”) at an 82% advance rate on a matched term, non-mark-to-market and non-recourse basis. A consolidated subsidiary of the Company retained an 18% subordinate and controlling interest in the CLO. The Company retained consent rights over major decisions with respect to the servicing of the Contributed July 2021 Loans, including the right to appoint and replace the special servicer under the CLO. The CLO is a VIE and the Company was the primary beneficiary and, therefore, consolidated the VIE - See Note 10,9, Consolidated Variable Interest Entities.
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On December 2, 2021, a consolidated subsidiary of the Company completed a privately marketed CLO transaction, which generated $566.2 million of gross proceeds to Ladder, financing $729.4 million of loans (“Contributed December 2021 Loans”) at a maximum 77.6% advance rate on a matched term, non-mark-to-market and non-recourse basis. A consolidated subsidiary of the Company retained an 15.6% subordinate and controlling interest in the CLO. The Company also held two additional tranches as investments totaling 6.8% interest in the CLO. The Company retained consent rights over major decisions with respect to the servicing of the Contributed December 2021 Loans, including the right to appoint and replace the special servicer under the CLO. The CLO is a VIE and the Company was the primary beneficiary and, therefore, consolidated the VIE - See Note 10,9, Consolidated Variable Interest Entities.
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As of March 31, 2023, the Company had $1.1 billion of matched term, non-mark-to-market and non-recourse CLO debt included in debt obligations on its consolidated balance sheets. Unamortized debt issuance costs of $4.8 million were included in CLO debt as of March 31, 2023.

As of December 31, 2022, the Company had $1.1 billion of matched term, non-mark-to-market and non-recourse CLO debt included in debt obligations on its consolidated balance sheets. Unamortized debt issuance costs of $9.0$5.9 million were included in CLO debt as of MarchDecember 31, 2022.

As of December 31, 2021, the Company had $1.1 billion of matched term, non-mark-to-market and non-recourse CLO debt
included in debt obligations on its consolidated balance sheets. Unamortized debt issuance costs of $9.6 million were included
in CLO debt as of December 31, 2021.

Borrowings from the Federal Home Loan Bank (“FHLB”)

On July 11, 2012, Tuebor, a consolidated subsidiary of the Company, became a member of the FHLB and subsequently drew its first secured funding advances from the FHLB. As of February 19, 2021, pursuant to a final rule adopted by the Federal Housing Finance Agency (the “FHFA”) regarding the eligibility of captive insurance companies, Tuebor’s membership in the FHLB has been terminated, although outstanding advances may remain outstanding until their scheduled maturity dates. Funding for future advance paydowns is expected to be obtained from the natural amortization and/or sales of securities collateral, or from other financing sources. There is no assurance that the FHFA or the FHLB will not take actions that could adversely impact Tuebor’s existing advances. 

As of March 31, 2022,2023, Tuebor had $263.0$213.0 million of borrowings outstanding, with terms of 0.440.4 years to 2.51.5 years (with a weighted average of 1.71.0 year), interest rates of 0.61%2.74% to 2.74%5.18% (with a weighted average of 1.12%4.98%), and advance rates of 71.7% to 95.7%97.1% on eligible collateral. As of March 31, 2023, collateral for the borrowings was comprised primarily of $250.7 million of CMBS.

As of December 31, 2022, Tuebor had $213.0 million of borrowings outstanding, with terms of 0.6 years to 1.75 years (with a weighted average of 1.25 years), and interest rates of 2.74% to 4.70% (with a weighted average of 4.52%). As of December 31, 2022, collateral for the borrowings was comprised of $262.2$248.8 million of CMBS and U.S. Agency securities and $36.7 million of cash.

As of December 31, 2021, Tuebor had $263.0 million of borrowings outstanding from the FHLB, with terms of 0.7 years to 2.8 years, interest rates of 0.36% to 2.74%, and(with advance rates of 71.7% to 95.7% on eligible collateral, including cash collateral. As of December 31, 2021, collateral for the borrowings was comprised of $259.3 million of CMBS and U.S. Agency securities, and $42.5 million of cash collateral., respectively).

Tuebor is subject to state regulations which require that dividends (including dividends to the Company as its parent) may only be made with regulatory approval. However, there can be no assurance that we would obtain such approval if sought. Largely as a result of this restriction, approximately $1.2$0.8 billion of Tuebor’s member’s capital was restricted from transfer via dividend to Tuebor’s parent without prior approval of state insurance regulators at March 31, 2022.2023. To facilitate intercompany cash funding of operations and investments, Tuebor and its parent maintain regulator-approved intercompany borrowing/lending agreements.

Senior unsecured notes

As of March 31, 2022,2023, the Company had $1.6 billion of unsecured corporate bonds outstanding. These unsecured financings were comprised of $348.0$327.8 million in aggregate principal amount of 5.25% senior notes due 2025 (the “2025 Notes”), $651.8$614.4 million in aggregate principal amount of 4.25% senior notes due 2027 (the “2027 Notes”) and $650.0$642.9 million in aggregate principal of 4.75% senior notes due 2029 (the “2029 Notes,” and collectively with the 2025 Notes and the 2027 Notes, the “Notes”).

As of December 31, 2021, we2022, the Company had $1.6 billion of unsecured corporate bonds outstanding. These unsecured financings were
comprised of $348.0$344.0 million in aggregate principal amount of 5.25% senior notes due 2025 Notes and $651.8(the “2025 Notes”), $650.8 million in aggregate principal amount of 4.25% senior notes due 2027 Notes(the “2027 Notes”) and $650.0$649.0 million in aggregate principal amount of 4.75% senior notes due 2029 Notes.(the “2029 Notes,” and collectively with the 2025 Notes and the 2027 Notes, the “Notes”).

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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 and certain subsidiaries of LCFH currently guarantee the obligations under the Notes and the indenture. The Company believes it was in compliance with all covenants of the Notes as of March 31, 20222023 and 2021. Unamortized2022. The Notes are presented net of unamortized debt issuance costs of $17.9$14.2 million and $18.7$15.4 million are included in senior unsecured notes as of March 31, 20222023 and December 31, 2021, respectively, in accordance with GAAP.2022, respectively.
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2025 Notes

On September 25, 2017, LCFH issued $400.0 million in aggregate principal amount of 5.250% senior notes due October 1, 2025 (the “2025 Notes”). The 2025 Notes require interest payments semi-annually in cash in arrears, on April 1 and October 1 of each year, beginning on April 1, 2018. The 2025 Notes are unsecured, and are subject to an unencumbered assets to unsecured debt covenant. The Company may redeem the 2025 Notes, in whole or in part, at any time, or from time to time, prior to their stated maturity upon not less than 1510 nor more than 60 days’ notice, at a redemption price as specified in theeach respective indenture governing the 2025 Notes, plus accrued and unpaid interest, if any, to the redemption date. On May 2, 2018, theThe board of the directors has authorized the Company to repurchase any or all of the 2025 Notes from time to time without further approval. As of

During the three months ended March 31, 2022,2023, the remaining $348.0Company repurchased $16.2 million in aggregate principal amount of the 2025 Notes is due October 1, 2025.

2027 Notes

On January 30, 2020, LCFH issued $750.0and recognized a gain of $1.3 million in aggregate principal amounton extinguishment of 4.25% senior notes due February 1, 2027. The 2027 Notes require interest payments semi-annually in cash in arrears on August 1 and February 1 of each year, beginning on August 1, 2020. The 2027 Notes are unsecured and are subject to an unencumbered assets to unsecured debt, covenant. The Company may redeem the 2027 Notes, in whole, at any time, or from time to time, prior to their stated maturity. At any time on or after February 1, 2023, the Company may redeem the 2027 Notes in whole or in part, upon not less than 15 nor more than 60 days’ notice, at a redemption price defined in the indenture governing the 2027 Notes, plus accrued and unpaid interest, if any, to the redemption date. Net proceeds of the offering were used to repay secured indebtedness. On February 26, 2020, the board of the directors authorized the Company to repurchase any or all$36.4 million of the 2027 Notes from time to time without further approval. Asand recognized a gain of March 31, 2022, the remaining $651.8$6.4 million in aggregate principal amounton extinguishment of the 2027 Notes is due February 1, 2027.

2029 Notes

On June 23, 2021, LCFH issued $650.0debt, and $6.1 million in aggregate principal amount of 4.75% senior notes due June 15, 2029. The 2029 Notes require interest payments semi-annually in cash in arrears on June 15 and December 15 of each year, beginning December 15, 2021. The 2029 Notes are unsecured and are subject to an unencumbered asset to unsecured debt covenant. The Company may redeem the 2029 Notes, in whole, at any time, or from time to time, prior to their stated maturity. At any time on or after June 15, 2024, the Company may redeem the 2029 Notes in whole or in part, upon not less than 10 nor more than 60 days’ notice, at a redemption price defined in the indenture governing the 2029 Notes, plus accrued and unpaid interest, if any, to the redemption date. Net proceeds of the offering were used for general corporate purposes, including funding the Company’s pipeline of new loans, investments in its core business lines and repayment of indebtedness. On June 24, 2021, the board of the directors authorized the Company to repurchase any or all of the 2029 Notes from time to time without further approval. Asand recognized a gain of March 31, 2022, the remaining $650.0$1.4 million in aggregate principal amounton extinguishment of the 2029 Notes is due June 15, 2029.debt.

Stock Repurchases

On August, 4, 2021,July 27, 2022, the board of directors authorized the repurchase of $50.0 million of the Company’s Class A common stock from time to time without further approval. This authorization increased the remaining outstanding authorization per the October 30, 2014August 4, 2021 authorization of $35.0from $39.5 million to $50.0 million. Stock repurchases by the Company are generally made for cash in open market transactions at prevailing market prices but may also be made in privately negotiated transactions or otherwise. The timing and amount of purchases are determined based upon prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. As of March 31, 2022,2023, the Company has a remaining amount available for repurchase of $43.5$44.5 million, which represents 2.9%3.7% in the aggregate of its outstanding Class A common stock, based on the closing price of $11.87$9.45 per share on such date. Refer to Item 1—“Financial Statements—Note 11, Equity Structure and Accounts” for disclosure of the Company’s repurchase activity.

The following table is a summary of the Company’s repurchase activity of its Class A common stock during the three months ended March 31, 20222023 ($ in thousands):
SharesAmount(1)
Authorizations remaining as of December 31, 2022$46,737 
Additional authorizations— 
Repurchases paid250,000 (2,285)
Authorizations remaining as of March 31, 2023$44,452 
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SharesAmount(1)
Authorizations remaining as of December 31, 2021$44,122 
Additional authorizations— 
Repurchases paid55,000 (611)
Repurchases unsettled— 
Authorizations remaining as of March 31, 2022$43,511 
(1) Amount excludes commissions paid associated with share repurchases.

Dividends

In order for the Company to maintain its qualification as a REIT under the Code, it must annually distribute at least 90% of its taxable income. The Company has paid and in the future intends to declare regular quarterly distributions to its shareholders in aggregating to an amount approximating at least 90% of the REIT’s annual net taxable income. Refer to Item 1 —“Financial Statements and Supplemental Data—Note 11,10, Equity Structure and Accounts” for disclosure of dividends declared.

Principal repayments on investments

We receive principal amortization on our loans and securities as part of the normal course of our business. Repayment of mortgage loan receivables provided net cash of $150.2 million for the three months ended March 31, 2023 and $358.2 million for the three months ended March 31, 2022, $305.8 million for the three months ended December 31, 2021, and $394.5 million for the three months ended March 31, 2021.2022. Repayment of real estate securities provided net cash of $60.2 million for the three months ended March 31, 2023, and $57.8 million for the three months ended March 31, 2022, $73.6 million for the three months ended December 31, 2021, and $10.5 million for the three months ended March 31, 2021.2022.

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Proceeds from securitizations and sales of loans

We sell our conduit mortgage loans to securitization trusts and to other third parties as part of our normal course of business and from time to time will sell balance sheet mortgage loans. There were no proceeds from sales of mortgage loans for the three months ended March 31, 2022, $132.5 million of sales of mortgage loans for the three months ended December 31, 2021,2023, and $46.6 million ofthere were no proceeds from sales of mortgage loans for the three months ended March 31, 2021.2022.

Proceeds from the sale of securities

We sell our investments in CMBS, U.S. Agency securities, corporate bonds, U.S. Treasury securities, and equity securities as a part of our normal course of business. Proceeds from sales of securities provided net cash of $13.6 million for the three months ended March 31, 2023, and $4.3 million for the three months ended March 31, 2022, $73.6 million for the three months ended December 31, 2021, and $329.1 million for the three months ended March 31, 2021.2022.

Proceeds from the sale of real estate
 
ProceedsThere were no proceeds from sales of real estate provided net cash offor the three months ended March 31, 2023, and $79.5 million for the three months ended March 31, 2022, $55.8 million for the three months ended December 31, 2021, and $43.8 million for the three months ended March 31, 2021.

Proceeds from the issuance of equity
For the three months ended March 31, 2022, December 31, 2021, and March 31, 2021, there were no proceeds realized in connection with the issuance of equity. We may issue additional equity in the future.2022.

Other potential sources of financing
 
In the future, we may also use other sources of financing to fund the acquisition of our assets, including credit facilities, warehouse facilities, repurchase facilities and other secured and unsecured forms of borrowing. These financings may be collateralized or non-collateralized, may involve one or more lenders and may accrue interest at either fixed or floating rates. We may also seek to raise further equity capital or issue debt securities in order to fund our future investments.
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Contractual obligations and commitments
 
Contractual obligations as of March 31, 20222023 were as follows ($ in thousands):
Contractual Obligations (1)Contractual Obligations (1)
Less than 1 Year1-3 Years3-5 YearsMore than 5 YearsTotalLess than 1 Year1-3 Years3-5 YearsMore than 5 YearsTotal
Secured financings(2)Secured financings(2)$419,166 $844,605 $204,473 $185,773 $1,654,017 Secured financings(2)$170,351 $927,637 $283,709 $69,692 $1,451,389 
Senior unsecured notesSenior unsecured notes— — 347,956 1,301,838 1,649,794 Senior unsecured notes— — 942,195 642,868 1,585,063 
Interest payable(3)Interest payable(3)105,048 194,927 158,297 86,493 544,765 Interest payable(3)102,471 191,307 102,572 49,878 446,228 
Other funding obligations(4)Other funding obligations(4)66,606 308,801 29,720 5,735 410,862 Other funding obligations(4)19,988 148,923 5,100 — 174,011 
Operating lease obligationsOperating lease obligations795 — — — 795 Operating lease obligations788 4,426 4,450 13,344 23,008 
TotalTotal$591,615 $1,348,333 $740,446 $1,579,839 $4,260,233 Total$293,598 $1,272,293 $1,338,026 $775,782 $3,679,699 
(1)As more fully disclosed in Note 7,6, Debt Obligations, Net, the allocation of repayments under our committed loan repurchase facilities and Secured Financing Facility is based on the earlier ofof: (i) the maturity date of each agreement,agreement; or (ii) the maximum maturity date of the collateral loans, assuming all extension options are exercised by the borrower.
(2)Total does not include $1.1 billion of consolidated CLO debt obligations and the related debt issuance costs of $9.0$4.8 million, as the satisfaction of these liabilities will not require cash outlays from us.
(3)Comprised of interest on secured financings and on senior unsecured notes. For borrowings with variable interest rates, we used the rates in effect as of March 31, 20222023 to determine the future interest payment obligations.
(4)Comprised primarily of our off-balance sheet unfunded commitment to provide additional first mortgage loan financing as of March 31, 2022.2023. The allocation of our unfunded loan commitments is based on the earlier of the commitment expiration date or the final maturity date, however, we may be obligated to fund these commitments earlier than such date.

The table above does not include amounts due under our derivative agreements as those contracts do not have fixed and determinable payments. Our contractual obligations will be refinanced and/or repaid from earnings as well as amortization and sales of our liquid collateral. We have made investments in various unconsolidated joint ventures of which our maximum exposure to loss from these investments is limited to the carrying value of our investments. Refer to Note 6 - Investments in and advances made on unconsolidated joint ventures for further detail.


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Future Liquidity Needs

In addition to the future contractual obligations above, the Company, in the coming year and beyond, as a part of its normal course of business will require cash to fund unfunded loan commitments and new investments in a combination of balance sheet mortgage loans, conduit loans, real estate investments and securities as it deems appropriate as well as necessary expenses as a part of general corporate purposes. These new investments and general corporate expenses may be funded with existing cash, proceeds from loan and securities payoffs, through financing using our revolving credit facilityRevolving Credit Facility or loan and security financing facilities, or these could be funded through additional debt or equity facility raises. The Company has no known material cash requirements other than its contractual obligations in the above table, unfunded commitments and future general corporate expenses.

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Unfunded Loan Commitments
 
We may be a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financial needs of our borrowers. These commitments are not reflected on the consolidated balance sheets. As of March 31, 2022,2023, our off-balance sheet arrangements consisted of $409.7$289.8 million of unfunded commitments of mortgage loan receivables held for investment, 52%54% of which additional funds relate to the occurrence of certain “good news” events, such as the owner concluding a lease agreement with a major tenant in the building or reaching some pre-determined net operating income. As of December 31, 2021,2022, our off-balance sheet arrangements consisted of $390.1$321.8 million of unfunded commitments of mortgage loan receivables held for investment to provide additional first mortgage loan financing. Such commitments are subject to our borrowers’ satisfaction of certain financial and nonfinancial covenants and involve, to varying degrees, elements of credit risk in excess of the amount recognized in the consolidated balance sheets. Commitments are subject to our loan borrowers’ satisfaction of certain financial and nonfinancial covenants and may or may not be funded depending on a variety of circumstances including timing, credit metric hurdles, and other nonfinancial events occurring.

Unsettled Trades

As of March 31, 2023, the Company had $109.7 million of U.S. Treasury securities traded and not yet settled on its consolidated balance sheets. The COVID-19 pandemic has impacted the progress of work generally and, depending on specific property locations, the progress of capital expenditures, construction, and leasing, which have been delayed and/or slower paced than originally anticipated. The progress of those particular projects located in states or local municipalities with continuing restrictions on such activities is anticipated to remain slower to complete than otherwise underwritten at loan origination,U.S. Treasury securities are recorded within other assets, and the timingrelated payable is recorded within other liabilities. These balances relate to the Company’s purchase of U.S. Treasury securities with maturities of less than three months, which will be recorded within cash and amounts of our future funding commitments are likely to be slower and possibly diminished by our clients’ changing business plans to adapt to market conditions.cash equivalents upon settlement.

LIBOR Transition

Specifically, weWe have implemented or are in the process of implementing fallback language for our LIBOR-based mortgage loans, bi-lateral committed repurchase facilities and revolving credit facility, including adjustments as applicable to maintain the anticipated economic terms of the existing contracts. As of March 31, 2022, 82.1%2023, 68.6% and 17.9%31.4% of our floating rate loans earn interest at a rate indexed to LIBOR and Term SOFR, respectively; and 84.9%59.8% and 15.1%40.2% of our floating rate debt obligations bear interest indexed to LIBOR and Term SOFR, respectively. We continue to monitor the transition guidance provided by the ARRC, the International Swaps and Derivatives Association, Inc., the Financial Accounting Standards BoardFASB and other relevant regulators, agencies and industry working groups, and we continue to engage with clients, lenders, market participants and other industry leaders as the transition from LIBOR progresses.

Interest Rate Environment
 
The nature of the Company’s business exposes it to market risk arising from changes in interest rates. Changes, both increases and decreases, in the rates the Company is able to charge its borrowers, the yields the Company is able to achieve in its securities investments, and the Company’s cost of borrowing directly impacts its net income. The Company’s net interest income includes interest from both fixed and floating-rate debt. The percentage of the Company’s assets and liabilities bearing interest at fixed and floating rates may change over time, and asset composition may differ materially from debt composition. Refer to Item 7A.3. Quantitative and Qualitative Disclosures about Market Risk for further disclosures surrounding the impact of rising or falling interest rate on our earnings.

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Critical Accounting Policies and Estimates

The preparation of financial statements in accordance with GAAP requires management to make estimates and judgments in certain circumstances that affect amounts reported as assets, liabilities, revenues and expenses. We have established detailed policies and control procedures intended to ensure that valuation methods, including any judgments made as part of such methods, are well controlled, reviewed and applied consistently from period to period. We base our estimates on historical corporate and industry experience and various other assumptions that we believe to be appropriate under the circumstances. The Company’s critical accounting policies are those which require assumptions to be made about matters that are highly uncertain. Different estimates could have a material effect on the Company’s financial results. For all of these estimates, we caution that future events rarely develop exactly as forecasted, and therefore, routinely require adjustment.

During 2022,2023, management reviewed and evaluated these critical accounting estimates and believes they are appropriate. Our significant accounting policies are described in Item 8—1—“Financial Statements and Supplemental Data—Note 2.” The following is a list of accounting policies that require more significant estimates and judgments:

•Current expected credit losses
•Acquisition of real estate
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•Impairment or disposal of long lived assets
•Identified intangible assets and liabilities
•Variable interest entities
•Valuation of financial instruments

The following is a summary of accounting policies that require more significant management estimates and judgments:

Current expected credit lossesProvision for Loan Losses

The Company uses a current expected credit loss model (“CECL”) for estimating the provision for loan losses on its loan portfolio. The CECL model requires the consideration of possible credit losses over the life of an instrument and includes a portfolio-based component and an asset-specific component. In compliance with the CECL reporting requirements, the Company has supplemented theits existing credit monitoring and management processes with additional processes to support the calculation of the CECL reserves. As part of that effort, the Company engages a third-party service provider to provide market data and a credit loss model. The credit loss model is a forward-looking, econometric, commercial real estate (“CRE”) loss forecasting tool. It is comprised of a probability of default (“PD”) model and a loss given default (“LGD”) model that, layered together with user’sthe Company’s loan-level data, fair value of collateral, net operating income of collateral, selected forward-looking macroeconomic variables, and pool-level mean loss rates, produces life of loan expected losses (“EL”) at the loan and portfolio level. Where management has determined that the credit loss model does not fully capture certain external factors, including portfolio trends or loan-specific factors, a qualitative adjustment to the reserve is recorded. In addition, interest receivable on loans is not included in the Company’s CECL calculations as the Company performs timely write offs of aged accounts receivable. The Company has made a policy election to write off aged receivables through interest income as opposed to through the CECL provision on its statements of income.

The asset-specific reserve component relates to reserves for losses on individually impaired loans. The Company evaluates each loan for impairment at least quarterly. Impairment occurs when it is deemed probable that the Company will not be able to collect all amountsprincipal and coupon interest due according to the contractual terms of the loan. If the loan is considered to be impaired, an allowance is recorded to reduce the carrying value of the loan to the present value of the expected future cash flows discounted at the loan’s effective rate or the fair value of the collateral, less the estimated costs to sell, if recovery of the Company’s investment is expected solely from the collateral. The Company generally will use the direct capitalization rate valuation methodology or the sales comparison approach to estimate the fair value of the collateral for such loans and in certain cases will obtain external appraisals. Determining fair value of the collateral may take into account a number of assumptions including, but not limited to, cash flow projections, market capitalization rates, discount rates and data regarding recent comparable sales of similar properties. Such assumptions are generally based on current market conditions and are subject to economic and market uncertainties.

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The Company’s loans are typically collateralized by real estate directly or indirectly. As a result, the Company regularly evaluates the extent and impact of any credit deterioration associated with the performance and/or value of the underlying collateral property as well as the financial and operating capability of the borrower/sponsor on a loan-by-loan basis. Specifically, a property’s operating results and any cash reserves are analyzed and used to assess: (i) whether cash flow from operations is sufficient to cover the debt service requirements currently and into the future,future; (ii) the ability of the borrower to refinance the loan at maturity,maturity; and/or (iii) the property’s liquidation value. The Company also evaluates the financial wherewithal of any loan guarantors as well as the borrower’s competency in managing and operating the properties. In addition, the Company considers the overall economic environment, real estate sector, and geographic submarket in which the collateral property is located. Such impairment analyses are completed and reviewed by asset management and underwriting personnel, who utilize various data sources, including: (i) periodic financial data such as property occupancy, tenant profile, rental rates, operating expenses, the borrowers’ business plan, and capitalization and discount rates,rates; (ii) site inspections,inspections; and (iii) current credit spreads and other market data and ultimately presented to management for approval.

A loan is also considered impaired if its terms are modified inWhen a troubled debt restructuring (“TDR”). A TDR occurs when a concession is granted and the debtor is experiencing financial difficulties. Impairments on TDR loans are generally measured based ondifficulties and a loan is modified, the present value of expected future cash flows discounted at the effective interest rateeffect of the original loans.modification will be included in the Company’s assessment of the CECL allowance for loan losses. If the Company provides principal forgiveness, the amortized cost basis of the loan is written off against the allowance for loan losses. Generally, when granting concessions, the Company will seek to protect its position by requiring incremental pay downs, additional collateral or guarantees and, in some cases, lookback features or equity interests to offset concessions granted should conditions impacting the loan improve. The Company’s determination of credit losses is impacted by TDRs whereby loans that have gone through TDRs are considered impaired, assessed for specific reserves, and are not included in the Company’s assessment of the CECL reserve. Loans previously restructured under TDRs that subsequently default are reassessed to incorporate the Company’s current assumptions on expected cash flows and additional provision expense is recorded to the extent necessary.

The Company designates a loan as a non-accrual loansloan generally when: (i) the principal or coupon interest components of loan payments become 90-days past duedue; or (ii) in the opinion of the Company, it is doubtful the Company will be able to collect all amountsprincipal and coupon interest due according to the contractual terms of the loan. Interest income on non-accrual loans in which the Company reasonably expects a full recovery of the loan’s outstanding principal balance is recognized when received in cash. Otherwise, income recognition will be suspended and any cash received will be applied as a reduction to the amortized cost.cost basis. A non-accrual loan is
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returned to accrual status at such time as the loan becomes contractually current and future principal and coupon interest are reasonably assured to be received in accordance with the contractual loan terms. A loan will be written off when management has determined itprincipal and coupon interest is no longer realizable and deemed non-recoverable.

The CECL accounting estimate is subject to uncertainty as a result of changing macro-economic market conditions, as well as the vintage and location of the underlying assets as disclosed in Note 3. Mortgage Loans Receivable. There was an increase in the estimate to $33.1 million at March 31, 2022 compared to $32.2 million at December 31, 2021. The estimate is sensitive to the assumptions used to represent future expected economic conditions.

The provision for (release of) loan losses for the three months ended March 31, 2022, December 31, 2021,2023 and March 31, 2021 were $0.9 million, $(1.8)2022 was $4.7 million and $4.3 million respectively. The allowance for loan losses as of March 31, 2022, December 31, 2021, and March 31, 2021, were $32.3 million, $31.8 million, and $36.2$0.9 million, respectively.

Acquisition of real estate

We generally acquire real estate assets or land and development assets through purchases and may also acquire such assets through foreclosure or deed-in-lieu of foreclosure in full or partial satisfaction of defaulted loans. Purchased properties are classified as real estate, net or land and development, net on our consolidated balance sheets. When we intend to hold, operate or develop the property for a period of at least 12 months, the asset is classified as real estate, net, and when we intend to market a property for sale inif the near term,asset meets the held-for-sale criteria, the asset is classified as real estate held for sale. Upon purchase, the properties are recorded at cost. Foreclosed assets classified as real estate and land and development are initially recorded at their estimated fair value and assets classified as assets held for sale are recorded at their estimated fair value less costs to sell. The excess of the carrying value of the loan over these amounts is charged-off against the reserve for loan losses. In both cases, upon acquisition, tangible and intangible assets and liabilities acquired are recorded at their estimatedrelative fair values.

Impairment or disposal of long-lived assets

Real estate assets to be disposed of are reported at the lower of their carrying amount or estimated fair value less costs to sell and are included in real estate held for sale on our consolidated balance sheets. The difference between the estimated fair value less costs to sell and the carrying value will be recorded as an impairment charge. Impairment for real estate assets are included in impairment of assets in our consolidated statements of operations. Once the asset is classified as held for sale, depreciation expense is no longer recorded.

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We periodically review real estate to be held and used, and land and development assets for impairment in value, whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. The asset’s value is impaired only if management’s estimate of the aggregate future cash flows (undiscounted and without interest charges) to be generated by the asset (taking into account the anticipated holding period of the asset) is less than the carrying value. Such estimate of cash flows considers factors such as expected future operating income, trends and prospects, as well as the effects of demand, competition and other economic factors. To the extent impairment has occurred, the loss will be measured as the excess of the carrying amount of the property over the fair value of the asset and reflected as an adjustment to the basis of the asset. Impairments of real estate and land and development assets are recorded in impairment of assets in our consolidated statements of operations.

We had twoThere were no properties classified held for sale at March 31, 2022 and one property classified as held for sale atas of March 31, 2023 and December 31, 2021.2022. We did not record any impairments of real estate for the three months ended March 31, 20222023 or DecemberMarch 31, 2021.2022.

Identified intangible assets and liabilities

We record intangible assets and liabilities acquired at their estimatedrelative fair values, and determine whether such intangible assets and liabilities have finite or indefinite lives. As of March 31, 20222023 and December 31, 2021,2022, all such acquired intangible assets and liabilities have finite lives. We amortize finite lived intangible assets and liabilities over the period which the assets and liabilities are expected to contribute directly or indirectly to the future cash flows of the businessasset acquired. We review finite lived intangible assets for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. If we determine the carrying value of an intangible asset is not recoverable, we will record an impairment charge to the extent its carrying value exceeds its estimated fair value. Impairments of intangibles are recorded in impairment of assets in our consolidated statements of income.



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Variable interest entities

We evaluate our investments and other contractual arrangements to determine if our interests constitute variable interests in a variable interest entity (“VIE”) and if we are the primary beneficiary. There is a significant amount of judgment required to determine if an entity is considered a VIE and if we are the primary beneficiary. We first perform a qualitative analysis, which requires certain subjective decisions regarding our assessment, including, but not limited to, which interests create or absorb variability, the contractual terms, the key decision makingdecision-making powers, impact on the VIE’s economic performance and related party relationships. An iterative quantitative analysis is required if our qualitative analysis proves inconclusive as to whether the entity is a VIE or we are the primary beneficiary and consolidation is required.

Fair value of assets and liabilities

The degree of management judgment involved in determining the fair value of assets and liabilities is dependent upon the availability of quoted market prices or observable market parameters. For financial and nonfinancial assets and liabilities that trade actively and have quoted market prices or observable market parameters, there is minimal subjectivity involved in measuring fair value. When observable market prices and parameters are not fully available, management judgment is necessary to estimate fair value. In addition, changes in market conditions may reduce the availability of quoted prices or observable data. For example, reduced liquidity in the capital markets or changes in secondary market activities could result in observable market inputs becoming unavailable. Therefore, when market data is not available, we would use valuation techniques requiring more management judgment to estimate the appropriate fair value measurement.

Recently Adopted Accounting Pronouncements and Recent Accounting Pronouncements Pending Adoption

Our recently adopted accounting pronouncements and recent accounting pronouncements pending adoption are described in Item 8—1—“Financial Statements and Supplemental Data—Note 2. Significant Accounting Policies.”
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Reconciliation of Non-GAAP Financial Measures
 
Distributable earnings
 
The Company utilizes distributable earnings, a non-GAAP financial measure, as a supplemental measure of our operating performance. We believe distributable earnings assists 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: (i) to evaluate our earnings from operations because management believes that it may be a useful performance measure for usus; and (ii) because our board of directors considers distributable earnings in determining the amount of quarterly dividends.

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

For distributable earnings, we include adjustments for economic gains on loan sales not recognized under GAAP accounting for which risk has substantially transferred during the period and exclude the resultant GAAP recognition of the related economics during the subsequent periods. This adjustment is reflected in distributable earnings when there is a true risk transfer on the mortgage loan transfer and settlement. Historically, this adjustment has represented the impact of economic gains/(discounts) on intercompany loans secured by our own real estate which we had not previously recognized because such gains were eliminated in consolidation. Conversely, if the economic risk was not substantially transferred, no adjustments to net income would be made relating to those transactions for distributable earnings purposes. Management believes recognizing these amounts for distributable earnings purposes in the period of transfer of economic risk is a reasonable supplemental measure of our performance.
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As discussed in Note 2 to the consolidated financial statements included elsewhere in this Quarterly Report, we do not designate derivatives as hedges to qualify for hedge accounting and therefore any net payments under, or fluctuations in the fair value of, our derivatives are recognized currently in our GAAP income statement. However, fluctuations in the fair value of the related assets are not included in our income statement. We consider the gain or loss on our hedging positions related to assets that we still own as of the reporting date to be “open hedging positions.” While recognized for GAAP purposes, we exclude the results on the hedges from distributable earnings until the related asset is sold andand/or 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.
 
As more fully discussed in Note 2 to the consolidated financial statements included elsewhere in this Quarterly Report, our investments in Agency interest-only securities and equity securities are recorded at fair value with changes in fair value recorded in current period earnings. We believe that excluding these specifically identified gains and losses associated with the fair value securities adjusts for timing differences between when we recognize changes in the fair values of our assets. With regard to securities valuation, distributable earnings includes a decline in fair value deemed to be an impairment for GAAP purposes only if the decline is determined to be nearly certain to be eventually realized. In those cases, an impairment is included in distributable earnings for the period in which such determination was made. Set forth below is an unaudited reconciliation of income (loss) before taxes to distributable earnings ($ in(in thousands):
Three Months Ended
March 31,December 31,
20222021
Income (loss) before taxes$17,845 $29,307 
Net (income) loss attributable to noncontrolling interests in consolidated joint ventures (GAAP)(122)37 
Our share of real estate depreciation, amortization and gain adjustments (1)(6,447)(3,493)
Adjustments for unrecognized derivative results (2)(2,453)(811)
Unrealized (gain) loss on fair value securities(17)4 
Adjustment for economic gain on loan sales not recognized under GAAP for which risk has been substantially transferred, net of reversal/amortization1,434 1,003 
Adjustment for impairment (3)874 (1,763)
Non-cash stock-based compensation20,412 3,427 
Distributable earnings$31,526 $27,711 
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Three Months Ended
March 31,December 31,
20232022
Income (loss) before taxes$23,911 $75,265 
Net (income) loss attributable to noncontrolling interests in consolidated ventures (GAAP)217 (14,700)
Our share of real estate depreciation, amortization and gain adjustments (1)6,754 (28,253)
Adjustments for derivative results (2)2,698 505 
Unrealized (gain) loss on fair value securities(117)(12)
Adjustment for economic gain on loan sales not recognized under GAAP for which risk has been substantially transferred, net of reversal/amortization(150)(81)
Adjustment for impairment (3)4,736 2,338 
Non-cash stock-based compensation9,124 3,798 
Distributable earnings$47,173 $38,860 
(1) The following is a reconciliation of GAAP depreciation and amortization to our share of real estate depreciation, amortization and gain adjustments presented in the computation of distributable earnings in the preceding table ($ in thousands):
(1)The following is a reconciliation of GAAP depreciation and amortization to our share of real estate depreciation, amortization and gain adjustments ($ in thousands):
Three Months Ended
March 31,December 31,
20232022
Total GAAP depreciation and amortization$7,529 $7,909 
Less: Depreciation and amortization related to non-rental property fixed assets(103)(32)
Less: Non-controlling interests in consolidated ventures’ share of depreciation and amortization and adjustment for passive interest in unconsolidated ventures(218)(406)
Our share of real estate depreciation and amortization7,208 7,471 
Realized gain from accumulated depreciation and amortization on real estate sold— (44,570)
Less: Non-controlling interests in consolidated ventures’ share of accumulated depreciation and amortization on real estate sold— 9,292 
Our share of accumulated depreciation and amortization on real estate sold (a)— (35,278)
Less: Our share of operating lease income on above/below market lease intangible amortization(454)(446)
Our share of real estate depreciation, amortization and gain adjustments$6,754 $(28,253)
(a) GAAP gains/losses on sales of real estate include the effects of previously recognized real estate depreciation and amortization. For purposes of distributable earnings, our share of real estate depreciation and amortization is eliminated and, accordingly, the resultant gain/losses also must be adjusted. The following is a reconciliation of the related consolidated GAAP amounts to the amounts reflected in distributable earnings ($ in thousands):
Three Months Ended
March 31,December 31,
20232022
GAAP realized gain (loss) on sale of real estate, net$— $53,897 
Adjusted gain/loss on sale of real estate for purposes of distributable earnings— (18,619)
Accumulated depreciation and amortization on real estate sold$— $35,278 
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Three Months Ended
March 31,December 31,
20222021
Total GAAP depreciation and amortization$9,342 $9,481 
Less: Depreciation and amortization related to non-rental property fixed assets(8)(25)
Less: Non-controlling interests in consolidated joint ventures’ share of accumulated depreciation and amortization and unrecognized passive interest in unconsolidated joint ventures(301)(947)
Our share of real estate depreciation and amortization9,033 8,509 
Realized gain from accumulated depreciation and amortization on real estate sold (refer to below)(15,036)(11,554)
Less: Non-controlling interests in consolidated joint ventures’ share of accumulated depreciation and amortization on real estate sold— — 
Our share of accumulated depreciation and amortization on real estate sold (a)(15,036)(11,554)
Less: Operating lease income on above/below market lease intangible amortization(444)(448)
Our share of real estate depreciation, amortization and gain adjustments$(6,447)$(3,493)
(a) GAAP gains/losses on sales of real estate include the effects of previously recognized real estate depreciation and amortization. For purposes of distributable earnings, our share of real estate depreciation and amortization is eliminated and, accordingly, the resultant gain/losses also must be adjusted. Following is a reconciliation of the related consolidated GAAP amounts to the amounts reflected in distributable earnings ($ in thousands):
Three Months Ended
March 31,December 31,
20222021
GAAP realized gain (loss) on sale of real estate, net$29,154 $18,611 
Adjusted gain/loss on sale of real estate for purposes of distributable earnings(14,118)(7,057)
Our share of accumulated depreciation and amortization on real estate sold$15,036 $11,554 
(2)(2)The following is a reconciliation of GAAP net results from derivative transactions to our unrecognized derivative result presented in the computation of distributable earnings in the preceding table ($ in thousands):(2)The following is a reconciliation of GAAP net results from derivative transactions to our derivative result presented in the computation of distributable earnings ($ in thousands):
Three Months Ended
Three Months EndedMarch 31,December 31,
March 31,December 31,20232022
20222021Net results from derivative transactions$2,242 $21 
Net results from derivative transactions$3,135 $747 Hedging interest income (expense)252 (215)
Hedging interest expense336 1,107 Other hedging related activity (a)204 699 
Hedging realized result(1,018)(1,043)Adjustments for derivative results$2,698 $505 
Adjustments for unrecognized derivative results$2,453 $811 
(a) Includes unrealized lower cost of market adjustments of $0.2 million and $0.4 million for the three months ended March 31, 2023 and December 31, 2022, respectively.
(3)(3)The adjustment reflects the portion of the loan loss provision that management determined to be recoverable. Additional provisions and releases of those provisions are excluded from distributable earnings as a result.(3)The adjustment reflects the portion of the loan loss provision that management determined to be recoverable. Additional provisions and releases of those provisions are excluded from distributable earnings as a result.

Distributable earnings has limitations as an analytical tool. Some of these limitations are:
 
•Distributable earnings does not reflect the impact of certain cash charges resulting from matters we consider not to be indicative of our ongoing operations and is not necessarily indicative of cash necessary to fund cash needs; and
 
•Other companies in our industry may calculate distributable earnings differently than we do, limiting its usefulness as a comparative measure.

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

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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 distributable earnings should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.



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Item 3. Quantitative and Qualitative Disclosures about Market Risk
 
For a discussion of current market conditions, including from the COVID-19 pandemic, refer to Part II,I, Item 7.2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and to Part I,II, Item 1A. “Risk Factors.”

Interest Rate Risk
 
The nature of the Company’s business exposes it to market risk arising from changes in interest rates. Changes, both increases and decreases, in the rates the Company is able to charge its borrowers, the yields the Company is able to achieve in its securities investments, and the Company’s cost of borrowing directly impacts its net income. The Company’s net interest income includes interest from both fixed and floating-rate debt. The percentage of the Company’s assets and liabilities bearing interest at fixed and floating rates may change over time, and asset composition may differ materially from debt composition. Another component of interest rate risk is the effect changes in interest rates will have on the market value of the assets the Company acquires. The Company faces the risk that the market value of its assets will increase or decrease at different rates than that of its liabilities, including its hedging instruments. The Company mitigates interest rate risk through utilization of hedging instruments, primarily interest rate swap and futures agreements. Interest rate swap and futures agreements are utilized to hedge against future interest rate increases on the Company’s borrowings and potential adverse changes in the value of certain assets that result from interest rate changes. The Company generally seeks to hedge assets that have a duration longer than five years, including newly originated conduit first mortgage loans, securities in the Company’s CMBS portfolio if long enough in duration, and most of its U.S. Agency securities portfolio.

The following table summarizes the change in net income for a 12-month period commencing March 31, 20222023 and the change in fair value of our investments and indebtedness assuming an increase or decrease of 100 basis points in the relevant benchmark interest rates on March 31, 2022,2023, both adjusted for the effects of our interest rate hedging activities ($ in thousands):
Projected change
in net income(1)		Projected change
in portfolio
value		Projected change
in net income(1)		Projected change
in portfolio
value
Change in interest rate:Change in interest rate:Change in interest rate:
Decrease by 1.00%Decrease by 1.00%$(8,416)$2,808 Decrease by 1.00%$(26,039)$4,299 
Increase by 1.00%Increase by 1.00%24,200 (3,549)Increase by 1.00%26,577 (4,537)
(1)    Subject to limits for floors on our floating rate investments and indebtedness.
 
Market Risk
 
As market volatility increases or liquidity decreases, the market value of the Company’s assets may be adversely impacted.

The Company’s securities investments are reflected at their estimated fair value. The change in estimated fair value of securities available-for-sale is reflected in accumulated other comprehensive income. The change in estimated fair value of Agency interest-only securities is recorded in current period earnings. The estimated fair value of these securities fluctuates primarily due to changes in interest rates and other factors. Generally, in a rising interest rate environment, the estimated fair value of these securities would be expected to decrease; conversely, in a decreasing interest rate environment, the estimated fair value of these securities would be expected to increase. We continue to actively monitor the impacts of COVID-19 on our securities portfolio.

The Company’s fixed rate mortgage loan portfolio is subject to the same risks. However, to the extent those loans are classified as held for sale, they are reflected at the lower of cost or market. Otherwise, held for investment mortgage loans are reflected at values equal to the unpaid principal balances net of certain fees, costs and loan loss allowances.

Concentrations of market risk may exist with respect to the Company’s investments. Market risk is a potential loss the Company may incur as a result of change in the fair values of its investments. The Company may also be subject to risk associated with concentrations of investments in geographic regions and industries.

 
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Liquidity Risk
 
Market disruptions may lead to a significant decline in transaction activity in all or a significant portion of the asset classes in which the Company invests and may at the same time lead to a significant contraction in short-term and long-term debt and equity funding sources. A decline in liquidity of real estate and real estate-related investments, as well as a lack of availability of observable transaction data and inputs, may make it more difficult to sell the Company’s investments or determine their fair values. As a result, the Company may be unable to sell its investments, or only be able to sell its investments at a price that may be materially different from the fair values presented. Also, in such conditions, there is no guarantee that the Company’s borrowing arrangements or other arrangements for obtaining leverage will continue to be available or, if available, will be available on terms and conditions acceptable to the Company. In addition, a decline in market value of the Company’s assets may have particular adverse consequences in instances where it borrowed money based on the fair value of its assets. A decrease in the market value of the Company’s assets may result in the lender requiring it to post additional collateral or otherwise sell assets at a time when it may not be in the Company’s best interest to do so. The Company’s captive insurance company subsidiary, Tuebor, is subject to state regulations which require that dividends may only be made with regulatory approval, limiting the Company’s ability to utilize cash held by Tuebor.
 
Credit Risk

The Company is subject to varying degrees of credit risk in connection with its investments. The Company seeks to manage credit risk by performing deep credit fundamental analyses of potential assets and through ongoing asset management. The Company’s investment guidelines do not limit the amount of its equity that may be invested in any type of its assets; however, investments greater than a certain size are subject to approval by the Risk and Underwriting Committee of the board of directors.

The continuing COVID-19 pandemic has significantly impacted the commercial real estate markets, causing reduced occupancy, requests from tenants for rent deferral or abatement, and delays in property renovations currently planned or underway. These negative conditions, which are in various stages of subsiding, may occur again in the future as a result of COVID-19 variants and the governmental responses thereto, and impair borrowers’ ability to pay principal and interest due under our loan agreements. We maintain robust asset management relationships with our borrowers and have utilized these relationships to address the ongoing impacts of the COVID-19 pandemic on our loans. Our portfolio’s low weighted-averageweighted average loan-to-value of 68.1%67.9% as of March 31, 20222023 reflects significant equity value that our sponsors are motivated to protect through periods of cyclical disruption. While we believe the principal amounts of our loans are generally adequately protected by underlying collateral value, there is a risk that we will not realize the entire principal value of certain investments.

Credit Spread Risk

Credit spread risk is the risk that interest rate spreads between two different financial instruments will change. In general, fixed-rate commercial mortgages and CMBS are priced based on a spread to Treasury or interest rate swaps. The Company generally benefits if credit spreads narrow during the time that it holds a portfolio of mortgage loans or CMBS investments, and the Company may experience losses if credit spreads widen during the time that it holds a portfolio of mortgage loans or CMBS investments. The Company actively monitors its exposure to changes in credit spreads and the Company may enter into credit total return swaps or take positions in other credit relatedcredit-related derivative instruments to moderate its exposure against losses associated with a widening of credit spreads.

Risks Related to Real Estate

Real estate and real estate-related assets, including loans and commercial real estate-related securities, are subject to volatility and may be affected adversely by a number of factors, including, but not limited to, national, regional and local economic conditions (which may be adversely affected by industry slowdowns and other factors); local real estate conditions; changes or continued weakness in specific industry segments; construction quality, age and design; demographic factors; environmental conditions; competition from comparable property types or properties; changes in tenant mix or performance and retroactive changes to building or similar codes and rent regulations. In addition, decreases in property values reduce the value of the collateral and the potential proceeds available to a borrower to repay the underlying loans, which could also cause the Company to suffer losses.

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Covenant Risk

In the normal course of business, the Company enters into loan and securities repurchase agreements and credit facilities with certain lenders to finance its real estate investment transactions. These agreements contain, among other conditions, events of default and various covenants and representations. If such events are not cured by the Company or waived by the lenders, the lenders may decide to curtail or limit extension of credit, and the Company may be forced to repay its advances or loans. In addition, the Company’s Notes are subject to covenants, including maintenance of unencumbered assets, limitations on the incurrence of additional debt, restricted payments, liens, sales of assets, affiliate transactions and other covenants typical for financings of this type. The Company’s failure to comply with these covenants could result in an event of default, which could result in the Company being required to repay these borrowings before their due date.

We were in compliance with all covenants as described in this Quarterly Report as of March 31, 2022.2023.

Diversification Risk

The assets of the Company are concentrated in the commercial real estate sector. Accordingly, the investment portfolio of the Company may be subject to more rapid change in value than would be the case if the Company were to maintain a wide diversification among investments or industry sectors. Furthermore, even within the commercial real estate sector, the investment portfolio may be relatively concentrated in terms of geography and type of real estate investment. This lack of diversification may subject the investments of the Company to more rapid change in value than would be the case if the assets of the Company were more widely diversified.
 
Regulatory Risk
 
Tuebor is subject to state regulation as a captive insurance company. If Tuebor fails to comply with regulatory requirements, it could be subject to loss of its licenses and registration and/or economic penalties.
 
Effective as of July 16, 2021, LCAM is a registered investment adviser under the Investment Advisors Act of 1940, as amended and currently provides investment advisory services solely to Ladder-sponsored collateralized loan obligation trusts (“CLO Issuers”). The CLO Issuers invest primarily in first mortgage loans secured by commercial real estate originated or acquired by Ladder and in participation interests in such loans. LCAM is entitled to receive a management fee connection with the advisory, administrative and monitoring services it performs for the CLO Issuer as the collateral manager; however, LCAM has waived this fee for so long as it or any of its affiliates serves as collateral manager for the CLO Issuers.

A registered investment adviser is subject to U.S. federal and state laws and regulations primarily intended to benefit its clients. These laws and regulations include requirements relating to, among other things, fiduciary duties to clients, maintaining an effective compliance program, solicitation agreements, conflicts of interest, record keeping and reporting requirements, disclosure requirements, custody arrangements, limitations on agency cross and principal transactions between an investment adviser and its advisory clients and general anti-fraud prohibitions. In addition, these laws and regulations generally grant supervisory agencies and bodies broad administrative powers, including the power to limit or restrict us from conducting our advisory activities in the event we fail to comply with those laws and regulations. Sanctions that may be imposed for a failure to comply with applicable legal requirements include the suspension of individual employees, limitations on our engaging in various advisory activities for specified periods of time, disgorgement, the revocation of registrations, and other censures and fines.
 
We may become subject to additional regulatory and compliance burdens if our investment adviser subsidiary expands its product offerings and investment platform.
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Item 4. Controls and Procedures

Disclosure Controls and Procedures

The Company’s management, with the participation of the Chief Executive Officer and the Chief Financial Officer, conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as required by Rules 13a-15 and 15d-15 under the Exchange Act as of March 31, 2022.2023. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective, as of March 31, 2022,2023, to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the applicable rules and forms, and that it is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during the quarter ended March 31, 20222023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Part II - Other Information
Item 1. Legal Proceedings

From time to time, we may be involved in litigation and claims incidental to the conduct of our business in the ordinary course. Further, certain of our subsidiaries, such as our registered investment adviser and captive insurance company, are subject to scrutiny by government regulators, which could result in enforcement proceedings or litigation related to regulatory compliance matters. We are not presently a party to any material enforcement proceedings, litigation related to regulatory compliance matters or any other type of material litigation matters. We maintain insurance policies in amounts and with the coverage and deductibles we believe are adequate, based on the nature and risks of our business, historical experience and industry standards.

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Item 1A. Risk Factors

There have been no material changes during the three months ended March 31, 20222023 to the risk factors in Item 1A in our Annual Report.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.
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Item 6. Exhibits
EXHIBIT INDEX
EXHIBIT
NO.		 DESCRIPTION
 
 
 
 
101Interactive Data Files Pursuant to Rule 405 of Regulation S-T: (i) the Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021; (ii) the Consolidated Statements of Income for the three months ended March 31, 2022 and 2021; (iii) the Consolidated Statements of Comprehensive Income for the three months ended March 31, 2022 and 2021; (iv) the Consolidated Statement of Changes in Equity for the three months ended March 31, 2022 and 2021; (v) the Consolidated Statements of Cash Flows for the three months ended March 31, 2022 and 2021; and (vi) the Notes to the Consolidated Financial Statements.101.SCH* iXBRL Schema Document.
101.CAL* iXBRL Calculation Linkbase Document.
101.DEF* iXBRL Definition Linkbase Document.
101.LAB* iXBRL Label Linkbase Document.
101.PRE* iXBRL Presentation Linkbase Document.
104Cover Page Interactive Data File (formatted in inline XBRL and contained in Exhibit 101)
*                                        The certifications attached hereto as Exhibits 32.1 and 32.2 are furnished to the SEC pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, nor shall they be deemed incorporated by reference in any filing under the Securities Act, except as shall be expressly set forth by specific reference in such filing.


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SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 LADDER CAPITAL CORP
 (Registrant)
Date: April 29, 202228, 2023By:/s/ BRIAN HARRIS
  Brian Harris
  Chief Executive Officer
Date: April 29, 202228, 2023By:/s/ PAUL J. MICELI
  Paul J. Miceli
  Chief Financial Officer

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