Ladder Capital Corp

Current report

•We cannot predict how government policies, Federal Reserve actions, or changes in the political environment will affect our business and the markets in which we operate.

Current report

•The evolving and often conflicting political and regulatory landscape surrounding sustainability and climate change creates significant uncertainty and compliance challenges.

Current report

Our success depends upon hiring and retaining qualified personnel, including senior management and loan originators, and the loss of key personnel could materially harm our business.

Current report

Our success depends heavily on our senior management team, who drive strategy and execution across all three of our business segments: loan originations, securities investments, and real estate investments. The loss of one or more of these key personnel could severely disrupt our operations and adversely affect our ability to execute our investment strategy. There is significant competition for talent in commercial real estate finance and investment management, and we may be unable to identify and attract suitable replacements in a timely manner if key personnel depart.

Current report

We cannot predict how government policies, Federal Reserve actions, or changes in the political environment will affect our business and the markets in which we operate.

Current report

Monetary policy responses to inflation have created significant volatility in financial and mortgage markets, particularly when rapid interest rate increases led to reduced commercial real estate transaction volumes and increased economic distress for property owners. This volatility made real estate transactions more challenging for potential borrowers, directly affecting our commercial real estate financing opportunities.

Current report

Federal fiscal challenges pose additional risks. Extended government shutdowns, failure to raise the debt ceiling, or other budgetary decisions limiting federal spending may negatively impact economic conditions and capital markets liquidity. Credit rating downgrades of the U.S. government—such as Fitch's 2023 downgrade from "AAA" to "AA+" and Moody's shift to a "negative" outlook—reflect concerns about federal debt levels and governance. Further downgrades or the possibility of a U.S. debt default could create broader financial turmoil, increase borrowing costs, reduce credit availability, and negatively impact our portfolio asset values, net income, liquidity, and ability to finance assets on favorable terms.

Current report

•geopolitical uncertainty, including international conflicts, trade disputes, political instability, and tensions involving the U.S. or its allies; and

Current report

•acts of God such as hurricanes, earthquakes, droughts, wildfires and other natural disasters, pandemics or outbreaks of infectious disease, acts of war or terrorism, civil unrest, and other events or trends that may cause unanticipated and uninsured performance declines or losses to us or the owners and operators of the real estate securing our investments.

Current report

Technology, e-commerce, and remote work have fundamentally changed commercial real estate demand patterns, and these shifts may have an adverse impact on the value of certain of our debt and equity investments.

Current report

The retail sector has evolved beyond traditional brick-and-mortar models, with consumer preferences shifting toward experiential retail, necessity-based retail, and service-oriented offerings. Grocery-anchored and service-oriented retail centers have demonstrated resilience, as consumers continue to value convenience and in-person services for essential needs. However, continued shifts in consumer behavior could cause certain tenants to reduce their physical footprint or experience financial stress, which could negatively impact our investments in those properties.

Current report

Hybrid work has become standard practice rather than an emerging trend, fundamentally altering demand for office space. As a direct result, the office sector faces structural challenges, including lower utilization rates and reduced space requirements per employee as companies adopt flexible work policies. Class B and Class C office properties, particularly those in secondary markets or those lacking modern amenities, face heightened pressure from these trends, while Class A office properties in strong primary markets with superior amenities and access to transportation have remained more competitive. These dynamics have led to increased vacancy rates in certain office submarkets and downward pressure on rents, particularly for older buildings with fewer amenities. Continued deterioration in office fundamentals, particularly in secondary markets, could negatively impact the value of our debt and equity investments in office properties and increase the risk of loan defaults or impairments.

Current report

The hospitality sector has experienced significant shifts in both leisure and business travel patterns. While leisure travel has rebounded strongly and business travel has substantially recovered from pandemic lows, the composition and patterns of business travel have shifted as companies continue to utilize virtual meeting technologies. Additionally, alternative lodging platforms have increased the supply of available accommodations in many markets, creating competitive pressure on traditional hotels. These changes in travel patterns and increased competition could negatively impact occupancy rates, average daily rates, and overall performance of hotel properties underlying our debt and equity investments.

Current report

These secular trends could continue to negatively impact certain property types in our portfolio, particularly office properties in secondary markets. These properties could also be adversely affected by shifting consumer behavior, economic downturns, tenant bankruptcies, increased competition, or other factors that could result in reduced occupancy, lower rental rates, and declining property values.

Current report

The U.S. Federal Reserve reduced its benchmark interest rates multiple times during 2024 and 2025 following the rapid rate increases of 2022 and 2023. Interest rates may continue to decline or may reverse direction depending on economic conditions, inflation trends, and Federal Reserve policy decisions. We remain exposed to rate-related risks given that we originate both fixed and floating rate loans and maintain both fixed and floating rate liabilities. Our primary interest rate exposures relate to the yield on our floating rate assets, the financing cost of our floating rate debt, and the Treasury futures that we utilize for hedging purposes. Interest rates are highly sensitive to many factors beyond our control, including governmental monetary and tax policies and domestic and international economic and political considerations. Increased interest rates increase the credit risk of our assets by negatively impacting our borrowers’ ability to pay debt service on floating rate loans or our ability to refinance assets upon maturity, negatively impact the value of real estate supporting our investments through higher property valuation capitalization rates, and may cause assets originated prior to rate increases to experience fair value declines or provide yields below prevailing market rates. Conversely, decreased interest rates can compress our net interest margins by reducing yields on floating rate assets and may accelerate loan prepayments requiring capital redeployment; however, declining rates also reduce our floating rate borrowing costs, improve borrower credit quality by reducing debt service burdens, and can increase property values through lower capitalization rates. The net effect of interest rate changes on our business depends on the timing and magnitude of such changes, the composition of our loan and securities portfolio, the relative mix of fixed and floating rate assets and liabilities, and the effectiveness of our hedging strategies.

Current report

In addition to benchmark interest rate risk, changes in credit spreads materially affect our business. Credit spreads represent the premium above benchmark rates that lenders and investors demand for assuming credit risk. Widening credit spreads increase our borrowing costs on secured financing facilities, warehouse lines, and impact when we access capital markets, even when benchmark interest rates remain stable or decline. Spread widening can also decrease the fair value of our loan and securities portfolios and reduce liquidity in commercial real estate debt markets. Credit spreads are influenced by market perceptions of commercial real estate credit quality, general investor risk appetite, capital market liquidity conditions, and factors specific to our Company including our financial performance and credit ratings. While narrowing credit spreads can benefit us through reduced funding costs and increased portfolio valuations, tighter spreads may also compress our loan origination margins and reduce the relative attractiveness of our returns on new originations compared to alternative investments.

Current report

•other governmental rules and policies;

Current report

•rising utility costs, increased insurance premiums, regulatory environmental requirements, or the potential liability relating to environmental matters that impact the value of properties we may acquire or the properties underlying our investments.

Current report

Inflation and increased operating costs have stressed and may continue to stress property performance and mortgage loan performance.

Current report

Increased operating expenses, such as rising energy costs and wages, stress property performance and thus mortgage loan performance. Investments with long-term leases featuring flat rental rates or longer-term fixed rate loans such as certain conduit loans, could experience relative value declines in a renewed inflationary environment. Our shorter-term floating rate loan portfolio may be better positioned to adjust to inflationary conditions than longer-duration fixed rate instruments, though inflation-driven cost increases would still present risks to property cash flows and borrower performance.

Current report

Certain property types and markets in our portfolio may be more vulnerable to inflationary pressures than others. For example, properties with significant operating expense exposure, such as those with high utility or labor costs, could experience margin compression if rental rates fail to keep pace with expense growth. Additionally, properties in markets with weaker demand fundamentals or increased new supply may face greater challenges in passing through cost increases to tenants through rent increases.

Current report

Operating and disposing of properties acquired through foreclosures subject us to additional risks that could harm our results of operations.

Current report

We actively manage our loan portfolio and may pursue foreclosure when we believe taking control of the underlying property represents the most effective strategy to maximize recovery value. We have substantial experience operating and disposing of foreclosed properties and view foreclosure as a strategic asset management tool available to us when appropriate. While foreclosure can be an effective recovery mechanism, owning and operating real property involves risks that are different (and in certain respects more complex) than the risks associated with owning a loan secured by that property. The costs associated with operating and redeveloping foreclosed properties, including any operating shortfalls and significant capital expenditures, could materially and adversely affect our results of operations, financial condition and liquidity. We may also be subject to environmental liabilities arising from properties acquired through foreclosure. In addition, when we elect to sell foreclosed property, the liquidation proceeds upon sale of the underlying real estate may not be sufficient to recover our cost basis, resulting in a loss to us. Furthermore, any costs or delays involved in the maintenance or liquidation of the underlying property will further reduce the net proceeds and, thus, increase the loss.

Current report

Further, third-party diligence reports on mortgaged properties and the properties we own are inherently limited and reflect conditions only as of a specific point in time. Appraisals, engineering reports, environmental assessments, and other third-party due diligence materials are not guarantees of present or future value or property condition. Different qualified professionals may reach different conclusions when evaluating the same property, and property values and conditions may change significantly after reports are issued. Moreover, third-party reports represent only the analysis and professional judgment of the individual consultant or firm at the time of preparation and may not reveal all necessary repairs, maintenance requirements, remediation needs, or capital improvements that may become apparent over time.

Current report

We require borrowers to maintain comprehensive insurance coverage as a condition of our loans, including property insurance, liability coverage, and in certain cases flood, earthquake, windstorm, and terrorism insurance. Our loan documents include detailed insurance requirements specifying minimum coverage amounts, acceptable carriers, deductible limits, and Ladder as loss payee and additional insured. We maintain systems to monitor insurance compliance and have the contractual right to force-place insurance at the borrower’s expense if required coverage lapses. Despite these protective measures, borrowers may not maintain adequate insurance, or insurance may not be available or economically feasible for certain risks, which could result in losses that exceed available coverage.

Current report

•a venture agreement may contain provisions that limit our exit options or require consent from other parties to transfer our interest;

Current report

•any credit ratings the Company or our corporate debt may receive from major rating agencies;

Current report

•the prevailing interest rates being paid by other companies that investors consider to be comparable to us; and

Current report

Following our achievement of investment grade credit ratings, certain financial and restrictive covenants in our outstanding 2027 and 2029 Notes are currently suspended and will remain suspended as long as we maintain investment grade ratings from specified rating agencies. However, if we were downgraded below investment grade, these suspended covenants would be automatically reinstated. The reinstated covenants would include, among others, limitations on our ability to incur additional indebtedness and requirements to maintain specified levels of unencumbered assets. Compliance with these reinstated covenants could significantly limit our operational and financial flexibility, potentially requiring us to modify our capital structure, adjust our dividend policy, or alter our investment strategies in ways that may not align with optimal business decisions at that time. Such constraints could restrict our ability to pursue growth opportunities, respond to market conditions, or deploy capital in the manner we believe would generate the best returns for our shareholders. Accordingly, a downgrade below investment grade would have consequences extending well beyond increased borrowing costs, as the reinstatement of these covenants could materially constrain our strategic and financial flexibility during a period when such flexibility may be most important to our business.

Current report

As a holding company, we depend on distributions from our subsidiaries to meet our obligations, and our obligations are structurally subordinated to the liabilities of our subsidiaries.

Current report

Ladder Capital Corp and LCFH are holding companies whose assets consist primarily of investments in their subsidiaries. Our ability to meet our debt service obligations and pay dividends to our shareholders depends substantially on our receipt of cash distributions and other transfers of funds from our operating subsidiaries. Our subsidiaries are separate and distinct legal entities with no general obligation to pay any amounts due on our debt obligations or to make any funds available for such payments, whether by dividends, distributions, loans or other payments, except as may be required under specific debt agreements or other contractual arrangements. The ability of our subsidiaries to make distributions to us is contingent upon their earnings and may be subject to statutory or regulatory limitations, as well as contractual restrictions under their respective financing arrangements. Certain of our debt agreements contain restrictions on distributions from subsidiaries above specified thresholds or in certain circumstances.

Current report

Additionally, as a result of our holding company structure, the claims of creditors of our subsidiaries have priority over the claims of our creditors and shareholders with respect to the assets and earnings of those subsidiaries. In the event of a bankruptcy, liquidation or reorganization of any of our subsidiaries, creditors of those subsidiaries would generally be entitled to seek payment in full from the assets of those subsidiaries before any assets or proceeds could be made available to us.

Current report

The evolving and often conflicting political and regulatory landscape surrounding sustainability and climate change creates significant uncertainty and compliance challenges that could adversely affect our business, operations, and financial condition.

Current report

Companies face a complex and contradictory regulatory environment where federal agencies, state governments, and local jurisdictions have adopted divergent approaches to sustainability and climate-related requirements. While some jurisdictions mandate extensive climate disclosures and sustainability considerations, others have enacted laws prohibiting or discouraging such practices, particularly regarding investment decisions with public funds. The change in administration has further intensified this regulatory fragmentation, with potential shifts in federal policy creating additional uncertainty about enforcement priorities and compliance expectations.

Current report

This regulatory uncertainty is compounded by ongoing litigation challenging various climate rules. For example, SEC climate disclosure rules remain stayed pending litigation, California's emissions disclosure requirements face legal challenges, and numerous other sustainability-related regulations are subject to court proceedings that create uncertainty about their ultimate scope and enforceability.

Current report

Navigating this fragmented regulatory landscape requires us to monitor and potentially comply with multiple, sometimes conflicting requirements across different jurisdictions where we operate. This regulatory complexity increases our legal, compliance, and operational costs, diverts management attention and resources, and creates risks of inadvertent non-compliance. The uncertainty also complicates our strategic planning and investment decisions, as we cannot predict which regulatory approaches will ultimately prevail or how enforcement priorities may shift.

Current report

Additionally, political dynamics surrounding these issues creates reputational risks regardless of our approach, as any position we take may be criticized by stakeholders with opposing views. This regulatory and political unpredictability could materially increase our costs, limit our operational flexibility, and adversely affect our business and results of operations.

Current report

On July 4, 2025, the OBBBA was enacted, which included certain provisions affecting REITs, including an increase in the taxable REIT subsidiary asset limitation from 20% to 25% of total assets effective for taxable years beginning after December 31, 2025. Congress continues to consider additional tax legislation that could further affect REITs and real estate investments, including potential changes to REIT qualification rules (income, asset, or distribution tests), the tax treatment of REIT earnings and dividends (including modifications to the Section 199A qualified business income deduction for REIT dividends), depreciation and cost-recovery rules, like-kind exchange rules under Section 1031, interest deductibility limitations, capital gains treatment, and other corporate tax provisions affecting taxable REIT subsidiaries. The scope, timing, and final form of any additional legislative changes remain uncertain, and any enacted provisions could potentially be applied retroactively. Significant changes to tax rules governing REITs could materially and adversely affect our tax liability, ability to qualify as a REIT, required distributions to shareholders, competitive position, and financial results.

Current report

Our business may be adversely affected if our reputation or the reputation of counterparties with whom we associate is harmed.

Current report

Reputational harm from actual or perceived legal or regulatory violations, operational failures, governance issues, cybersecurity breaches, claims of misconduct or conflicts of interest, or failure to meet investor or market expectations could adversely affect our ability to attract and retain employees, originate loans, access capital markets, maintain banking and counterparty relationships, and retain investor confidence. Market perception and actual or perceived association with counterparties, borrowers, or business partners whose reputations are compromised could also harm our business and the market price of our Class A common stock.

Previous report

•We cannot predict the effect that government policies, laws, and interventions adopted in response to an inflationary environment or the impact of changes in the U.S. political environment, including as a result of the change in administration, on our business and the markets in which we operate.

Previous report

•Our captive insurance subsidiary is subject to insurance laws.

Previous report

•Risks associated with climate change may adversely affect our business, financial results and reputation.

Previous report

•Actual or perceived environmental, social and governance matters may cause additional costs, reputational harm or investors to cease allocating capital to us, all of which could adversely affect our business and results of operations.

Previous report

We may not be able to hire and retain qualified loan originators or grow and maintain our relationships with key loan brokers, and if we are unable to do so, our ability to implement our business and growth strategies could be limited.

Previous report

We cannot predict the effect that government policies, laws, and interventions adopted in response to an inflationary environment or the impact of changes in the U.S. political environment, including as a result of the change in administration, on our business and the markets in which we operate.

Previous report

The U.S. Government and the Federal Reserve took significant actions in response to the inflationary environment in the U.S. in recent years, creating a great deal of volatility in financial and mortgage markets. For example, the tightening of monetary policy to address inflationary concerns drove a rapid and significant increase in interest rates, which resulted in a decline in commercial real estate transactions and an increased risk of economic distress for commercial property owners. Volatility in interest rates and credit spreads made the purchase and sale of real estate by potential borrowers challenging, which in turn affects the frequency of commercial real estate financing opportunities. There can be no assurance as to how actions taken by the U.S. Government or the Federal Reserve will affect the short- or long-term efficiency, liquidity, and stability of the financial and mortgage markets.

Previous report

Any further downgrade, or perceived potential downgrade, of the credit ratings of the U.S. and the failure to resolve issues related to U.S. fiscal and debt policies may materially adversely affect our business, liquidity, financial condition and results of operations. In August 2023, Fitch Ratings lowered its long-term sovereign credit rating of the U.S. from “AAA” to “AA+” due to concerns regarding the level and trajectory of federal debt and the erosion of governance, including on fiscal and debt matters and in November 2023, Moody’s Investors Service lowered its outlook on the U.S. government’s debt to “negative” from “stable” due to concerns regarding rising interest rates and political polarization in Congress. The impact of any further downgrades to the U.S. Government's sovereign credit rating or its perceived creditworthiness could adversely affect the U.S. and global financial markets and economic conditions and would likely impact the credit risk associated with some of the assets in our portfolio or those we may seek to acquire, including U.S. Treasury securities. A downgrade of the U.S. Government's credit rating or a default by the U.S. Government to satisfy its debt obligations likely would create broader financial turmoil and uncertainty, which would weigh heavily on the global banking system and these developments could cause interest rates and borrowing costs to rise and a reduction in the availability of credit, which may negatively impact the value of the assets in our portfolio, our net income, liquidity and our ability to finance our assets on favorable terms.

Previous report

•the broader impacts of global tensions such as the Ukraine-Russia and Middle East conflicts; and

Previous report

•civil unrest, terrorism, acts of war, outbreaks of communicable diseases, nuclear or radiological disasters, climate change and natural disasters.

Previous report

Shifts in consumer patterns, remote work policies and advances in communication and information technology that affect the use of traditional retail, hotel and office space may have an adverse impact on the value of certain of our debt and equity investments.

Previous report

Sales by online retailers continue to increase, and many retailers operating brick and mortar stores have made online sales a vital piece of their business. Some of our debt and equity investments involve exposure to the ongoing operations of brick-and-mortar retailers. Although many of the retailers operating in the properties underlying our debt and/or equity investments include pharmacies and/or sell groceries and other necessity-based soft goods or provide services, including entertainment and dining options, the shift to online shopping and other forms of self-service may cause declines in brick-and-mortar sales generated by certain of tenants at these properties and/or may cause certain of our tenants to reduce the size or number of their retail locations in the future.

Previous report

Technology and remote work policies, including hybrid schedules, have and will continue to impact the use of office space. The office market has seen a shift in the use of space due to the availability of practices such as telecommuting, videoconferencing and renting shared workspaces. These trends have led to more efficient workspace layouts and higher percentages of employees working remotely at least part of the week and, therefore, a decrease in leased office space. The continuing impact of technology and remote work policies could result in tenants utilizing less office space (including downsizing upon renewal), or in tenants seeking office space outside of the typical central business district. The increase in hybrid work schedules and the diminishing allure of urban living and socializing near workplaces also present a risk to adjacent retail and multifamily spaces. These trends could continue to cause an increase in vacancy rates and a decrease in demand for new supply, negatively impacting the value of our debt and equity investments.

Previous report

Vacation rental platforms have provided leisure and business travelers with lodging options outside of the hotel industry. These services effectively have increased the supply of rooms available in many major markets. This additional supply could negatively impact the occupancy rates and pricing at more traditional hotels.

Previous report

As a result of the foregoing, the value of certain of our debt and equity investments, and results of operations could be adversely affected.

Previous report

While the U.S. Federal Reserve recently cut its benchmark interest rates, it raised rates during 2022 and 2023 at the fastest pace since the 1980s. Although current rates remain below 1980s levels, they are considered significantly elevated by recent standards.

Previous report

Our primary interest rate exposures relate to the yield on our floating rate assets and the financing cost of our floating rate debt, as well as the Treasury futures that we utilize for hedging purposes. Interest rates are highly sensitive to many factors beyond our control, including but not limited to, governmental monetary and tax policies, and domestic and international economic and political considerations. Interest rate fluctuations present a variety of risks and may adversely affect our income or generate losses. Such risks include a mismatch between asset yields and borrowing rates and variances in the yield curve and prepayment rates. Increased interest rates also impact borrowers’ ability to refinance their loans at maturity and while the interest payable on the existing fixed rate debt on our real estate portfolio and corporate bonds becomes relatively cheaper with higher market interest rates, we may have to refinance this debt at higher rates at maturity.

Previous report

Demand for mortgages has been negatively impacted by rising interest rates and increases in the level of interest rates: (i) increase the credit risk of our assets by negatively impacting the ability of our borrowers to pay debt service on our floating rate loan assets or our ability to refinance our assets upon maturity; (ii) negatively impact the value of the real estate supporting our investments (or that we own directly) through the impact such increases can have on property valuation capitalization rates; and/or (iii) cause our targeted assets that were issued, originated or acquired prior to an interest rate increase to experience a decline in their fair value or provide yields that are below prevailing market interest rates.

Previous report

•unanticipated increases in real estate taxes and other operating expenses;

Previous report

•other governmental rules and policies including those associated with a transition to a low-carbon economy;

Previous report

Consumer demand, combined with tight labor markets, increased government spending and supply chain imbalances have created inflationary pressure on the U.S. economy in recent years. Inflation, along with governmental measures to control inflation, including significant increases to interest rates, coupled with public speculation about possible future governmental measures (such as tariffs) to be adopted, has had significant negative effects on national, regional and local economies.

Previous report

Increased costs, such as increased energy costs and wages, stress property performance and thus mortgage loan performance. In addition, investments with long-term leases that have flat rental rates or longer-term loans, such as existing conduit loans, with a fixed coupon may decrease in relative value.

Previous report

Finally, certain assets or markets may be more negatively affected by inflation. For example, when inflation increases, consumers may cut back on expenses, including travel, which may impact markets driven by tourism, and also non-essential goods and services, which may impact the retail sector.

Previous report

The success of our origination or acquisition of investments significantly depends on the financial healthy of the borrowers and tenants underlying such investments. We assess the strength and skills of that entity’s management and other factors that we believe are material to the performance of the investment using our own resources and, in some cases, an investigation by third parties.

Previous report

Further, third-party diligence reports on mortgaged properties and the properties we own are made as of a point in time and are therefore limited in scope. Appraisals and engineering and environmental reports, as well as a variety of other third-party reports, are generally obtained with respect to each of the properties we acquire and the mortgaged properties underlying our investments at or about the time of origination. These reports are not guarantees of present or future value or property condition. One appraiser may reach a different conclusion than the conclusion that would be reached if a different appraiser were appraising that property. Moreover, the values of the properties may have fluctuated significantly since the appraisals were performed. In addition, any third-party report, including any engineering report, environmental report, site inspection or appraisal represents only the analysis of the individual consultant, engineer or inspector preparing such report at the time of such report, and may not reveal all necessary or desirable repairs, maintenance, remediation and capital improvement items.

Previous report

The borrower, or we as property owner and/or originating lender, might not purchase enough or the proper types of insurance coverage to cover all losses.

Previous report

The Company has also disclosed its intention to achieve investment grade ratings and has outlined the steps taken in an effort to reach this goal. However, there is no guarantee that the Company will obtain or maintain these ratings. The pursuit of an investment grade rating may require us to adhere to specific financial metrics and operational constraints, which could limit our flexibility in making strategic business decisions. Additionally, achieving and maintaining such ratings may necessitate changes in our capital structure, dividend policy, or investment strategies, potentially impacting our growth and profitability. Furthermore, the Company may decide to discontinue this strategy at any time, which could lead to a reassessment of our financial goals and operational plans.

Previous report

Our subsidiary that operates as a captive insurance company is subject to insurance laws.

Previous report

We have organized a captive insurance company, Tuebor (the “captive”), to provide coverage previously self-insured by us, including nuclear, biological or chemical coverage, excess property coverage and excess errors and omissions coverage. During 2024, the captive entered “dormant” status, meaning the entity and insurance license still exist, but the captive is not actively writing ongoing insurance coverage. The captive is regulated by the State of Michigan and is subject to regulations that cover all aspects of its business, including a requirement to maintain a certain minimum net capital. Violation of these regulations can result in revocation of its authorization to do business as a captive insurer or result in censures or fines. Although less likely following the “dormant” status, the captive could also be found to be in violation of the insurance laws of states other than Michigan (i.e., states where insureds are located), in which case, fines and penalties could apply from those states.

Previous report

Risks associated with climate change may adversely affect our business, financial results, and reputation.

Previous report

The physical risks of climate change may result in increased costs and losses to Ladder and its borrowers. Extreme weather and natural disasters, such as earthquakes, hurricanes, tornadoes, tsunamis, fires and floods, may impact our properties and those serving as collateral for our loans in the short- to medium-term, requiring repairs and restoration of damaged properties and/or retrofitting such properties to better withstand such disasters. Changes in precipitation patterns and variability in weather patterns, rising mean temperatures and rising sea levels are longer-term physical risks to our business. Both our borrowers and we, as property owners in high-risk areas, face challenges in obtaining proper insurance, paying higher premiums, and meeting higher deductibles.

Previous report

Beyond physical risks, climate change presents transition risks as we and our borrowers adapt to a low-carbon economy. Changes in consumer preferences and new legislative or regulatory requirements could increase our costs or necessitate additional technology and capital investments, potentially adversely affecting our operations. The potential devaluation of carbon-intensive properties by investors and the rapid pace of such devaluation may negatively affect the value and liquidity of our properties and the properties underlying our collateral. While the ultimate scope and impact of climate-related rules and legislation on our business and our borrowers remain uncertain, compliance could lead to increased legal, accounting, and financial compliance costs, making some activities more difficult, time-consuming, and costly, and placing strain on our and our borrowers’ personnel, systems, and resources.

Previous report

In 2024, the SEC issued final rules regarding the enhancement and standardization of mandatory climate-related disclosures for investors. These rules mandate the disclosure of climate-related data, risks, and opportunities, including financial impacts, physical and transition risks, related governance and strategy, and greenhouse gas emissions for certain public companies. The rules are stayed pending litigation and the future of the rules is uncertain. At the state level, California enacted legislation in 2023 that requires certain companies doing business in California to publicly disclose their Scopes 1, 2, and 3 greenhouse gas emissions with third-party assurance, and to issue public reports on their climate-related financial risk and related mitigation measures. Additionally, companies making certain climate-related claims must provide enhanced disclosures regarding the achievement of such claims.

Previous report

Climate change also poses reputational risks for Ladder. Companies must navigate a changing legal and policy landscape of differing regulatory views and evolving international, federal, state, and local laws and regulations. Recent years have highlighted the risks of evolving standards and overcommitting to climate-related initiatives. See “Actual or perceived environmental, social and governance matters may cause us to incur additional costs or reputational harm or result in investors ceasing to allocate their capital to us, all of which could adversely affect our business and results of operations.”

Previous report

Actual or perceived environmental, social and governance matters may cause us to incur additional costs or reputational harm or result in investors ceasing to allocate their capital to us, all of which could adversely affect our business and results of operations.

Previous report

There has been increasing scrutiny and political pushback on companies from investors, regulators and other stakeholders related to environmental, social and governance (“ESG”) matters that has and may continue to result in inconsistent federal and state regulations and enforcement. For example, regulators are focused on companies that do not fulfill their claims of environmental sustainability and a variety of organizations, such as ESG ratings agencies, have developed and published rating systems and other scoring and reporting mechanisms to promote or accommodate the consideration of ESG factors by investors. However, certain state governors, legislatures, and attorneys general have passed laws or otherwise discouraged companies from considering ESG factors when making investment decisions, particularly with respect to public funds. Companies must balance these competing interests in determining how to best address ESG.

Previous report

ESG ratings agencies evaluate and compare our ESG performance with that of others in our industry. We do not participate in all such systems and may not score as well in all of the available ratings systems, as the proliferation of third-party providers of ESG ratings and reports has resulted in varied standards. These ratings systems may, for example, not be correlated to each other, depend on estimates, and continue to evolve. Further, the extent to which such rating agencies accept company feedback and the timing for reflecting such feedback in their reports varies, and scores are often based on a relative ranking, which may cause our scores to deteriorate if peer rankings improve. Still, current shareholders and prospective investors may use these ratings, and/or their own internal ESG benchmarks, to determine whether, and to what extent, they may choose to invest in our securities, engage with us to advocate for improved ESG performance or disclosure, make voting decisions as shareholders, or take other actions to hold us and our board of directors accountable with respect to ESG matters.

Previous report

Regardless of the industry, investors’ increased focus related to ESG and similar matters may hinder access to capital, as investors may decide to reallocate capital or to not commit capital as a result of a company’s ESG practices or ratings. If we do not adapt to or comply with ESG ratings, investor or other stakeholder expectations and standards, which are evolving, or if we are perceived to have not responded appropriately to the growing concern for ESG issues, we may suffer from reputational damage and our business, financial condition, and/or stock price could be materially and adversely affected. ESG rating agencies and our stakeholders may look to us to implement more or different ESG policies, procedures, standards or goals in order to improve our ratings, continue engaging with us, remain invested in us, or before they make further investments in us. In addition, the standards for tracking and reporting on ESG matters are relatively new, have not been harmonized, and continue to evolve. As a result, our selection of ESG disclosure frameworks and topics may change from time to time, may result in a lack of comparative data from period to period, or differ from the expectations of our shareholders and other stakeholders. To the extent investors focused on ESG ratings or matters are not satisfied with our ESG ratings or progress, we may not be able to raise sufficient capital, which may adversely affect our revenues. Relatedly, collecting, measuring, and reporting ESG information and metrics can be costly, difficult and time consuming, and can present numerous operational, reputational, financial, legal and other risks, any of which could have negative impact on our business, reputation and stock price. Additionally, adverse incidents with respect to ESG activities could impact our reputation or the cost of our operations and relationships with investors, all of which could adversely affect our business and results of operations. If we do not successfully manage expectations across these varied stakeholder interests, it could erode stakeholder trust, impact our reputation, and constrain our investment opportunities.

Previous report

There is also a growing regulatory interest across jurisdictions in improving transparency regarding the definition, measurement and disclosure of ESG factors. Any new rules or regulations may result in increased legal, accounting and financial compliance costs, make some activities more difficult, time-consuming and costly, and place strain on our personnel, systems and resources.

Previous report

31, 2022, we would possibly also be subject to certain taxes enacted by the Inflation Reduction Act of 2022 that are applicable to non-REIT corporations, including a corporate alternative minimum tax.

Current report — wording carried from elsewhere

•a partner may, at any time, have economic or business interests or goals that are, or may become, inconsistent with our business interests or goals;

Current report — wording carried from elsewhere

We do not offer consumer products and therefore do not generally collect or maintain consumer personal data. We do, however, have access to financial and other potentially sensitive information about our borrowers, guarantors and other counterparties, in addition to confidential employee information, which we store in our IT systems. Our information technology and infrastructure have been and likely will continue to be subject to security threats or breaches as a result of internal errors, negligence or external misconduct. The evolving threat landscape now includes both traditional cyberattacks and increasingly sophisticated artificial intelligence (“AI”)-enabled threats. Use of AI technologies by bad actors to facilitate cyberattacks or commit fraud has increased the likelihood of such attacks and the potential adverse impact of such attacks. For example, AI technologies may be used to create highly targeted and convincing phishing attacks, generate realistic deep-fake content for impersonation or fraud, automate and scale social engineering techniques, and develop more sophisticated malware that can evade traditional detection methods. Furthermore, in the operation of our business we also use third-party vendors that store certain sensitive data, including confidential information about our business and employees, and while we conduct commercially reasonable due diligence on these vendors, such third parties are subject to their own cybersecurity threats.

Previous report — wording carried elsewhere

To evaluate our target assets, our management team uses financial models and underwriting criteria, the effectiveness of which cannot be guaranteed. Our profitability depends, in large part, on our ability to originate loans or acquire target assets at attractive prices that, in our judgment, meet our criteria according to the results of our modeling. However, we operate in a highly competitive market for lending and other investment opportunities. In originating or acquiring target assets, we compete with a variety of institutional lenders and investors and many other market participants, including specialty finance companies, REITs, commercial banks and thrift institutions, investment banks, insurance companies, hedge funds and other financial institutions. Many competitors are substantially larger and have considerably greater financial, technical, marketing and other resources than we do. Unlike Ladder, certain of our competitors may not be subject to the operating constraints associated with

Previous report — wording carried elsewhere

Continuing defaults, delinquencies and losses would further decrease property values, thereby resulting in additional defaults by commercial mortgage borrowers, further credit constraints and further declines in property values.

Previous report — wording carried elsewhere

Accordingly, advances made to such types of borrowers entail higher risks than advances made to companies who are able to access traditional credit sources.

Previous report — wording carried elsewhere

•venture agreements often restrict the transfer of a partner’s interest or may otherwise restrict our ability to sell the interest when we desire and/or on advantageous terms;