Ladder Capital Corp

Previous wording

Ladder 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.

Current wording

Ladder Capital 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.

Previous wording

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 $29.8 billion of commercial real estate loans from our inception in October 2008 through September 30, 2024. During this timeframe, we also acquired $13.8 billion of predominantly investment grade-rated securities secured by first mortgage loans on commercial real estate and $2.1 billion of selected net leased and other real estate assets.

Current wording

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 $30.3 billion of commercial real estate loans from our inception in October 2008 through March 31, 2025. During this timeframe, we also acquired $14.6 billion of predominantly investment grade-rated securities secured by first mortgage loans on commercial real estate and $2.1 billion of selected net leased and other real estate assets.

Previous wording

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 September 30, 2024, we originated $16.9 billion of conduit loans, of which $16.9 billion were sold into 74 CMBS securitizations, making us, by volume, we have been one of the largest non-bank contributors 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.

Current wording

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, 2025, we originated $17.0 billion of conduit loans, of which $16.9 billion were sold into 74 CMBS securitizations, making us, by volume, one of the largest non-bank contributors 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.

Previous wording

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 Collateralized Loan Obligations (“CLO”) debt issuances and committed term financing from leading financial institutions. Refer to “Our Financing Strategies” and “Liquidity and Capital Resources” for further information.

Current wording

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

Previous wording

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 September 30, 2024, our management team and directors held interests in our Company comprising over 11% of our total equity. On average, our management team members have 28 years of experience in the industry. Our management team includes Brian Harris, Chief Executive Officer; Pamela McCormack, President; Paul J. Miceli, Chief Financial Officer; Robert Perelman, Head of Asset Management; and Kelly Porcella, Chief Administrative Officer & General Counsel. Anthony V. Esposito, Chief Accounting Officer, and Stephanie Lin, Assistant Secretary, are additional officers of Ladder.

Current wording

Ladder was founded in October 2008 and we completed our initial public offering in February 2014. We are led by a disciplined and highly aligned management team. As of March 31, 2025, our management team and directors held interests in our Company comprising over 11% of our total equity. On average, our management team members have 29 years of experience in the industry. Our management team includes Brian Harris, Chief Executive Officer; Pamela McCormack, President; Paul J. Miceli, Chief Financial Officer; Robert Perelman, Head of Asset Management; and Kelly Porcella, Chief Administrative Officer & General Counsel. Anthony V. Esposito, Chief Accounting Officer, and Stephanie Lin, Assistant Secretary, are additional officers of Ladder.

Previous wording

There are a number of factors that influence our operating results. Some of these factors include: (1) our competition; (2) market and economic conditions, including inflation; (3) loan origination and repayment volume; (4) profitability of securitizations; (5) avoidance of credit losses; (6) availability of debt and equity funding and the costs of that funding; (7) the net interest margin on our investments; (8) effectiveness of our hedging and other risk management practices; (9) real estate transaction volumes; (10) occupancy rates; and (11) expense management. Referthe heading“Results of Operations.”

Current wording

There are a number of factors that influence our operating results. Some of these factors include: (1) our competition; (2) market and economic conditions, including inflation; (3) loan origination and repayment volume; (4) profitability of securitizations; (5) avoidance of credit losses; (6) availability of debt and equity funding and the costs of that funding; (7) the net interest margin on our investments; (8) effectiveness of our hedging and other risk management practices; (9) real estate transaction volumes; (10) occupancy rates; and (11) expense management. Refer tothe heading “Results of Operations.”

Previous wording

We generally seek to hold our balance sheet first mortgage loans for investment although we also maintain the flexibility to contribute such loans into a CLO or similar structure, sell participation interests or “b-notes” in our mortgage loans or sell such mortgage loans as whole loans. Our balance sheet first mortgage loans may be refinanced by us into a new conduit first mortgage loan upon property stabilization. As of September 30, 2024, we held a portfolio of 57 balance sheet first mortgage loans with an aggregate book value of $2.0 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 66.4% at September 30, 2024.

Current wording

We generally seek to hold our balance sheet first mortgage loans for investment although we also maintain the flexibility to contribute such loans into a CLO or similar structure, sell participation interests or “b-notes” in our mortgage loans or sell such mortgage loans as whole loans. Our balance sheet first mortgage loans may be refinanced by us into a new conduit first mortgage loan upon property stabilization. As of March 31, 2025, we held a portfolio of 54 balance sheet first mortgage loans with an aggregate book value of $1.7 billion. Based on the loan balances and the “as-is” third-party Financial Institutions

Previous wording

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 September 30, 2024, we held a portfolio of 5 mezzanine loans with an aggregate book value of $13.8 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 73.6% at September 30, 2024.

Current wording

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, 2025, we held a portfolio of 4 mezzanine loans with an aggregate book value of $11.6 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 72.3% at March 31, 2025.

Previous wording

Conduit First Mortgage Loans. We also originate conduit loans, which are first mortgage loans that are secured by cash-flowing commercial real estate and are available for sale to securitizations. These first mortgage loans are typically structured with fixed interest rates and generally have five- to ten-year terms. Conduit first mortgage loans are originated, underwritten, approved and funded using the same comprehensive legal and underwriting approach, process and personnel used to originate our balance sheet first mortgage loans. Conduit first mortgage loans in excess of $50.0 million also require approval of our board of directors’ Risk and Underwriting Committee. We held one conduit loan with an aggregate carrying value of $27.5 million at September 30, 2024.

Current wording

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 two conduit loans with an aggregate carrying value of $90.4 million at March 31, 2025.

Previous wording

Although our primary intent is to sell our conduit first mortgage loans to CMBS trusts, we generally seek to maintain the flexibility to keep them on our balance sheet, sell participation interests or “B-notes” in such loans or sell the loans as whole loans. The Company holds these conduit loans in its taxable REIT subsidiary (“TRS”) upon origination. As of September 30, 2024, we held one conduit first mortgage loan that was available for contribution into securitizations. Based on the loan balance and the “as-is” third-party FIRREA appraised values at origination, loan-to-value ratio of this loan was 59.4% at September 30, 2024.

Current wording

Although our primary intent is to sell our conduit first mortgage loans to CMBS trusts, we generally seek to maintain the flexibility to keep them on our balance sheet, sell participation interests or “B-notes” in such loans or sell the loans as whole loans. The Company holds these conduit loans in its taxable REIT subsidiary (“TRS”) upon origination. As of March 31, 2025, we held two conduit first mortgage loans that were available for contribution into securitizations. Based on the loan balance and the “as-is” third-party FIRREA appraised values at origination, loan-to-value ratio of these loans was 48.4% at March 31, 2025.

Previous wording

Net Leased Commercial Real Estate Properties. As of September 30, 2024, we owned 155 single tenant net leased properties with an undepreciated book value of $637.3 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 September 30, 2024, our net leased properties comprised a total of 3.7 million square feet, 100% leased with an average age since construction of 19.5 years and a weighted average remaining lease term of 7.9 years. Commercial real estate investments in excess of $20.0 million require the approval of our board of directors’ Risk and Underwriting Committee. The majority of the tenants in our net leased properties are necessity-based businesses. During the three months ended September 30, 2024, we collected 100% of rent on these properties.

Current wording

Net Leased Commercial Real Estate Properties. As of March 31, 2025, we owned 149 single tenant net leased properties with an undepreciated book value of $591.5 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, 2025, our net leased properties comprised a total of 3.4 million square feet, 100% leased with an average age since construction of 20.1 years and a weighted average remaining lease term of 7.5 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 are necessity-based businesses. During the three months ended March 31, 2025, we collected 100% of rent on these properties.

Previous wording

Diversified Commercial Real Estate Properties. As of September 30, 2024, we owned 54 diversified commercial real estate properties throughout the U.S with an undepreciated book value of $308.3 million. During the three months ended September 30, 2024, we collected 99% of rent on these properties.

Current wording

Diversified Commercial Real Estate Properties. As of March 31, 2025, we owned 53 diversified commercial real estate properties throughout the U.S with an undepreciated book value of $300.9 million. During the three months ended March 31, 2025, we collected 99% of rent on these properties.

Previous wording

We invest in primarily AAA-rated real estate securities, typically front pay securities, with relatively short duration and significant subordination. We invest primarily in CMBS, including CLOs, secured by first mortgage loans on commercial real estate. These investments provide a stable and attractive base of net interest income and help us manage our liquidity and hyper-amortization features included in many of these securities positions help mitigate potential credit losses in the event of adverse market conditions. 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.

Current wording

We invest in primarily AAA-rated real estate securities, typically front pay securities, with relatively short duration and significant subordination. We invest primarily in CMBS, including CRE CLOs, secured by first mortgage loans on commercial real estate. These investments provide a stable and attractive base of net interest income and help us manage our liquidity and hyper-amortization features included in many of these securities positions help mitigate potential credit losses in the event of adverse market conditions. 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. In the future, we may invest in CMBS securities or other securities that are unrated.

Previous wording

As of September 30, 2024, the estimated fair value of our portfolio of CMBS investments totaled $843.4 million in 95 CUSIPs ($8.9 million average investment per CUSIP). Included in the $843.4 million of CMBS securities are $9.1 million of CMBS securities designated as risk retention securities under the Dodd-Frank Act, which are subject to transfer restrictions over the term of the securitization trust. The following chart summarizes our securities investments by market value, 98% of which were rated investment grade by Standard & Poor’s Ratings Group, Moody’s Investors Service, Inc. or Fitch Ratings Inc. as of September 30, 2024:

Current wording

As of March 31, 2025, the estimated fair value of our portfolio of CMBS investments totaled $1.5 billion in 105 CUSIPs ($14.0 million average investment per CUSIP). Included in the $1.5 billion of CMBS securities are $9.1 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, 99.3% 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, 2025:

Previous wording

In the future, we may invest in CMBS securities or other securities that are unrated. As of September 30, 2024, our CMBS investments had a weighted average duration of 2.4 years. The commercial real estate collateral underlying our CMBS investment portfolio is located throughout the United States. As of September 30, 2024, by property count and market value, respectively, 59.9% and 65.5% of the collateral underlying our CMBS investment portfolio was distributed throughout the top 25 metropolitan statistical areas (“MSAs”) in the United States, with 4.8% and 11.9%, by property count and market value, respectively, of the collateral located in the New York-Newark-Jersey City MSA, and the concentrations in each of the remaining top 24 MSAs ranging from 0.2% to 5.8% by property count and 0.1% to 8.2% by market value.

Current wording

As of March 31, 2025, our CMBS investments had a weighted average duration of 2.9 years. The commercial real estate collateral underlying our CMBS investment portfolio is located throughout the United States. As of March 31, 2025, by property count and market value, respectively, 59.0% and 66.1% of the collateral underlying our CMBS investment portfolio was distributed throughout the top 25 metropolitan statistical areas (“MSAs”) in the United States, with 5.1% and 11.4%, by property count and market value, respectively, of the collateral located in the New York-Newark-Jersey City MSA, and the concentrations in each of the remaining top 24 MSAs ranging from 0.4% to 5.8% by property count and 0.3% to 8.4% by market value.

Previous wording

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.

Current wording

AAA-rated CMBS or U.S. Agency securities investments in excess of $106.0 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.

Previous wording

Unconsolidated Ventures. From time to time we invest in real estate related ventures. As of September 30, 2024, the carrying value of our unconsolidated ventures was $20.0 million.

Current wording

Unconsolidated Ventures. From time to time we invest in real estate related ventures. As of March 31, 2025, the carrying value of our unconsolidated ventures was $19.2 million.

Previous wording

United States Treasury Securities. We invest in short-term and long-term U.S. Treasury securities. Short-term U.S. Treasury securities are classified as cash and cash equivalents on our consolidated balance sheet. As of September 30, 2024, we held $1.3 billion of U.S. Treasury securities classified as cash and cash equivalents on our consolidated balance sheet.

Current wording

United States Treasury Securities. We invest in short-term and long-term U.S. Treasury securities. Short-term U.S. Treasury securities are classified as cash and cash equivalents on our consolidated balance sheet. As of March 31, 2025, we held $483.1 million of U.S. Treasury securities classified as cash and cash equivalents on our consolidated balance sheet.

Previous wording

•Secured loan and securities repurchase facilities

Current wording

•Secured loan and securities repurchase financing

Previous wording

As of September 30, 2024, we had $2.1 billion of unsecured corporate bonds outstanding. These unsecured financings were comprised of $322.0 million in aggregate principal amount of 5.25% senior notes due 2025 (the “2025 Notes”), $611.9 million in aggregate principal amount of 4.25% senior notes due 2027 (the “2027 Notes”), $633.9 million in aggregate principal amount of 4.75% senior notes due 2029 (the “2029 Notes”) and $500.0 million in aggregate principal amount of 7.00% senior notes due 2031 (the “2031 Notes,” and collectively with the 2025 Notes, the 2027 Notes and the 2029 Notes, the “Notes”). The 2031 Notes were issued during the three months ended September 30, 2024 with an aggregate principal balance of $500.0 million.

Current wording

As of March 31, 2025, we had $2.0 billion of senior unsecured notes outstanding. These unsecured financings were comprised of $287.7 million in aggregate principal amount of 5.25% senior notes due 2025 (the “2025 Notes”), $599.5 million in aggregate principal amount of 4.25% senior notes due 2027 (the “2027 Notes”), $633.9 million in aggregate principal amount of 4.75% senior notes due 2029 (the “2029 Notes”) and $500.0 million in aggregate principal amount of 7.00% senior notes due 2031 (the “2031 Notes”, collectively with the 2025 Notes, the 2027 Notes and the 2029 Notes, the “Notes”). The Company and certain subsidiaries of LCFH currently guarantee the obligations under the Notes and the indenture.

Previous wording

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 $3.6 billion pool of unencumbered assets, comprised primarily of first mortgage loans and unrestricted cash as of September 30, 2024.

Current wording

Due in large part to devoting such a large portion of our capital structure to equity and unsecured corporate bond debt, we maintain a $3.7 billion pool of unencumbered assets, comprised primarily of first mortgage loans and unrestricted cash as of March 31, 2025.

Previous wording

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. Refer to Note 9, Consolidated Variable Interest Entities for additional information.

Current wording

On July 13, 2021, we financed a pool of $607.5 million of loans at an 82% advance rate on a matched term, non-mark-to-market and non-recourse basis in a managed CLO transaction (“LCCM 2021-FL2”), which generated $498.2 million of gross proceeds. We retained an 18% subordinate and controlling interest in LCCM 2021-FL2. The Company retained control over major decisions made with respect to the administration of the loans in LCCM 2021-FL2, including broad discretion in managing these loans, and has the ability to appoint the special servicer. On February 18, 2025, the Company redeemed all outstanding obligations of LCCM 2021-FL2.

Previous wording

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. Refer to Note 9, Consolidated Variable Interest Entities for additional information.

Current wording

On December 2, 2021, we financed a pool of $729.4 million of loans at a 77.6% advance rate on a matched term, non-mark-to-market and non-recourse basis in a managed CLO transaction (“LCCM 2021-FL3”), which generated $566.2 million of gross proceeds. We retained a 15.6% subordinate and controlling interest in the LCCM 2021-FL3 and held two additional tranches totaling 6.8% as investments. The Company retained control over major decisions made with respect to the administration of the loans in LCCM 2021-FL3, including broad discretion in managing these loans, and has the ability to appoint the special servicer. LCCM 2021-FL3 is a VIE and we are the primary beneficiary and, therefore, consolidate the VIE. Refer to Note 9, Consolidated Variable Interest Entities for further detail.

Previous wording

We are parties to multiple committed loan repurchase agreement facilities, totaling $1.2 billion of credit capacity. As of September 30, 2024, the Company had $244.5 million of borrowings outstanding, with an additional $911.5 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.

Current wording

We are a party to multiple committed loan repurchase agreement facilities, totaling $1.1 billion of credit capacity. As of March 31, 2025, we had $62.7 million of borrowings outstanding, with an additional $1.0 billion of committed financing available. Assets pledged as collateral under these facilities are generally limited to first lien whole mortgage loans, mezzanine loans and certain interests in such first mortgage and mezzanine loans.

Previous wording

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.

Current wording

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. In certain cases the lenders may require additional collateral, a full or partial repayment of the facilities (margin call), or a reduction in undrawn availability under 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.

Previous wording

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.

Current wording

We are a party to master repurchase agreements with several counterparties to finance our investments in securities. The securities that serve as collateral for these borrowings are typically highly liquid AAA-rated CMBS with relatively short duration and significant subordination. The lenders have sole discretion to determine the market value of the collateral on a daily basis, and, if the estimated market value of the collateral declines, the lenders have the right to require additional collateral. If the estimated market value of the collateral subsequently increases, we have the right to call back excess collateral.

Previous wording

The Company typically finances its real estate investments with long-term, non-recourse mortgage financing. These mortgage loans have carrying amounts of $513.8 million and $437.8 million, net of unamortized premiums of $3.9 million and $1.8 million as of September 30, 2024 and December 31, 2023, 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 $0.6 million of premium amortization, which decreased interest expense for the nine months ended September 30, 2024 and 2023. These non-recourse debt agreements provide for secured financing at rates ranging from 4.39% to 8.78%, and, as of September 30, 2024, have anticipated maturity dates between 2024 and 2034, with an average term of 3.5 years. The mortgage loans are collateralized by real estate and related lease intangibles, net, of $530.2 million and $474.7 million as of September 30, 2024 and December 31, 2023, respectively. During the three and nine months ended September 30, 2024, the Company executed six and 16 new term debt agreements, respectively, to finance properties in its real estate portfolio with carrying amounts of $13.0 million and $81.9 million, respectively. During the three and nine months ended September 30, 2023, the Company did not execute any term debt agreements.

Current wording

We typically finance our real estate investments with long-term, non-recourse mortgage financing. These mortgage loans have carrying amounts of $425.7 million, net of unamortized premiums of $3.5 million as of March 31, 2025, representing proceeds received upon financing greater than the contractual amounts due under these agreements. The premiums are being amortized over the remaining life of the respective debt instruments using the effective interest method. We recorded $0.2 million of premium amortization, which decreased interest expense for the three months ended March 31, 2025. During the three months ended March 31, 2025, we executed no new term debt agreements.

Previous wording

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.

Current wording

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 and securities if long enough in duration. 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.

Previous wording

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.

Current wording

Our borrowings under certain financing agreements are subject to financial covenants as defined in such agreements, including minimum net worth requirements, minimum liquidity levels, maximum leverage ratios, minimum fixed charge coverage or interest coverage ratios. These restrictions, which would permit us to incur substantial additional debt, are subject to significant qualifications and exceptions.

Previous wording

The $7.6 million increase in interest income was primarily attributable to collection of deferred interest from the resolution of a previously modified loan, and an increase in interest earned from CMBS and short-term U.S. Treasury securities due to purchases. There was a $229.1 million increase in average securities investments from $452.3 million for the three months ended June 30, 2024 to $681.4 million for the three months ended September 30, 2024. There was a $0.3 billion decrease in average loan investments from $2.6 billion for the three months ended June 30, 2024 to $2.3 billion for the three months ended September 30, 2024.

Current wording

The $13.8 million decrease in interest income was primarily attributable to net payoffs within our loan portfolio, partially offset by an increase in interest earned from CMBS securities due to purchases. There was a $0.3 billion increase in average securities investments from $1.0 billion for the three months ended December 31, 2024 to $1.3 billion for the three months ended March 31, 2025. There was a $0.3 billion decrease in average loan investments from $1.9 billion for the three months ended December 31, 2024 to $1.6 billion for the three months ended March 31, 2025.

Previous wording

The increase in net interest income before provision for loan losses of $4.1 million as explained above.

Current wording

The decrease in net interest income before provision for loan losses of $6.9 million is primarily driven by loan payoffs and paydowns, partially offset by the redemption of all outstanding obligations of LCCM 2021-FL2.

Previous wording

As of September 30, 2024 and June 30, 2024, the weighted average yield on our mortgage loan receivables was 9.2% and 9.4%, respectively. As of September 30, 2024 and June 30, 2024, the weighted average interest rate on borrowings against our mortgage loan receivables was 7.0% and 7.2%, respectively. The decrease in the rate on borrowings against our mortgage loan receivables from September 30, 2024 to June 30, 2024 was primarily due to decreases in prevailing interest rates. As of September 30, 2024, we had outstanding borrowings secured by our mortgage loan receivables equal to 50.7% of the carrying value of our mortgage loan receivables, compared to 51.9% as of June 30, 2024.

Current wording

As of March 31, 2025 and December 31, 2024, the weighted average yield on our mortgage loan receivables was 8.6% and 9.3%, respectively. As of March 31, 2025 and December 31, 2024, the weighted average interest rate on borrowings against our mortgage loan receivables was 6.3% and 6.4%, respectively. The decrease in the rate on borrowings against our mortgage loan receivables from March 31, 2025 to December 31, 2024 was primarily due to decreases in prevailing interest rates. As of March 31, 2025, we had outstanding borrowings secured by our mortgage loan receivables equal to 19.9% of the carrying value of our mortgage loan receivables, compared to 42.4% as of December 31, 2024.

Previous wording

As of September 30, 2024 and June 30, 2024, the weighted average yield on our securities was 6.8% and 6.9%, respectively. As of September 30, 2024, we did not have any borrowings against our securities. As June 30, 2024, the weighted average interest rate on borrowings against our securities was 6.7%. As of June 30, 2024, we had outstanding borrowings secured by our securities equal to 0.3% of the carrying value of our securities.

Current wording

As of March 31, 2025 and December 31, 2024, the weighted average yield on our securities was 5.7% and 6.0%, respectively. As of March 31, 2025 and December 31, 2024, we did not have any borrowings against our securities.

Previous wording

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 September 30, 2024 and June 30, 2024, the weighted average interest rate on mortgage borrowings against our real estate was 6.0%, respectively. As of September 30, 2024, we had outstanding borrowings secured by our real estate equal to 72.4% of the carrying value of our real estate, compared to 70.9% as of June 30, 2024.

Current wording

Our real estate portfolio is comprised of non-interest bearing assets; however, interest incurred on mortgage financing collateralized by such real estate is included in interest expense. As of March 31, 2025 and December 31, 2024, the weighted average interest rate on mortgage borrowings against our real estate was 6.1% and 6.0%, respectively. As of March 31, 2025, we had outstanding borrowings secured by our real estate equal to 65.0% of the carrying value of our real estate, compared to 66.6% as of December 31, 2024.

Previous wording

The decrease of $0.8 million in real estate operating income was primarily attributable to the sale of two multifamily portfolios, one retail portfolio and one office property during the three months ended June 30, 2024, for which there was no operating income during the three months ended September 30, 2024.

Current wording

The decrease of $1.6 million in real estate operating income was primarily attributable to sales that occurred during the three months ended December 31, 2024, for which there was no operating income during the three months ended March 31, 2025.

Previous wording

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 September 30, 2024, we recorded $1.1 million of unrealized gains on loans related to lower of cost or market adjustments on our conduit loans. During the three months ended June 30, 2024, recorded a lower of cost or market adjustment of $(0.5) million. 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.

Current wording

Net result from mortgage loan receivables held for sale includes unrealized losses on loans held for sale related to lower of cost or market adjustments and realized gains and losses from the sale of loans. During the three months ended March 31, 2025, we recorded $0.2 million of unrealized gains on loans related to lower of cost or market adjustments on our conduit loans. During the three months ended December 31, 2024, we recorded an unrealized loss related to a lower of cost or market adjustment of $(0.6) million. 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.

Previous wording

The decrease of $12.2 million of gain on real estate, net during the three months ended September 30, 2024 compared to the three months ended June 30, 2024 was primarily the result of the sale of one multifamily property during the three months ended September 30, 2024 compared to sales of two multifamily portfolios, one retail portfolio and one office property during the three months ended June 30, 2024.

Current wording

The decrease of $8.6 million of gain on real estate, net during the three months ended March 31, 2025 compared to the three months ended December 31, 2024 was the result of decreased property sales during the three months ended March 31, 2025 compared to property sales during the three months ended December 31, 2024. Refer to Note 5, Real Estate and Related Lease Intangibles, Net, for further detail.

Previous wording

We generate fee income on the loans we originate and in which we invest, and dividend income on our FHLB stock. The $3.0 million increase in fee and other income was primarily due to the timing of loan payoffs and late fees received for the three months ended September 30, 2024 as compared to the three months ended June 30, 2024.

Current wording

We generate fee income on the loans we originate and in which we invest and include unrealized and realized gains and losses on securities within fee and other income. The $0.5 million increase in fee and other income was primarily due to an increase in unrealized and realized gains on securities, and the timing of loan payoffs and late fees received for the three months ended March 31, 2025 as compared to the three months ended December 31, 2024.

Previous wording

Net result from derivative transactions of $0.8 million was comprised of a realized gain of $0.1 million and an unrealized loss of $0.9 million for the three months ended September 30, 2024. Net result from derivative transactions of $0.6 million was comprised of a realized gain of $0.5 million and an unrealized gain of $0.1 million for the three months ended June 30, 2024. The hedge positions primarily relate to fixed rate conduit loans and securities investments. The derivative positions that generated these results were a combination of five and ten year U.S. treasury rate futures that we employed in an effort to hedge the interest rate risk primarily on the financing of our fixed rate assets and the net interest income we earn against the impact of changes in interest rates. The gain during three months ended September 30, 2024 was primarily related to movement in interest rates during the three months ended September 30, 2024. 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.

Current wording

The total net result from derivative transactions is comprised of hedging interest expense, realized gains/losses related to hedge terminations and unrealized gains/losses related to changes in the fair value of asset hedges. Net result from derivative transactions of $323 thousand was comprised of a realized gain of $288 thousand and an unrealized gain of $35 thousand for the three months ended March 31, 2025. Net result from derivative transactions of $1.5 million was comprised of a realized gain of $1.8 million and an unrealized loss of $0.3 million for the three months ended December 31, 2024. The hedge positions primarily relate to fixed rate conduit loans and securities investments. The derivative positions that generated these results were a combination of five and ten year U.S. treasury rate futures that we employed in an effort to hedge the interest rate risk primarily on the financing of our fixed rate assets and the net interest income we earn against the impact of changes in interest rates. The gain during the three months ended March 31, 2025 was primarily related to movement in interest rates during the three months ended March 31, 2025.

Previous wording

During the three months ended September 30, 2024, there was $20 thousand of gain on extinguishment of debt as the Company retired: $5.8 million of principal of the 2025 Notes for a repurchase price of $5.8 million, recognizing a $20 thousand net gain on extinguishment of debt after recognizing $11 thousand of unamortized debt issuance costs associated with the retired debt.

Current wording

During the three months ended March 31, 2025, there was $0.3 million of gain on extinguishment of debt as the Company retired: (1) $8.0 million of principal of the 2025 Notes for a repurchase price of $8.0 million, recognizing a $6 thousand net gain on extinguishment of debt after recognizing $7 thousand of unamortized debt issuance costs associated with the retired debt; and (2) $12.4 million of principal of the 2027 Notes for a repurchase price of $12.2 million, recognizing a $0.2 million net gain on extinguishment of debt after recognizing $40 thousand of unamortized debt issuance costs associated with the retired debt.