Ladder Capital Joins the REIT IPO Party

Editor's Note: According to Renaissance Capital IPO Home, Ladder Capital has postponed its IPO indefinitely. Read the full news release here.

Ladder Capital Realty Finance (LCG) expects to go public this week. The newly-organized REIT intends to invest primarily in commercial real estate loans.

Business Overview (from prospectus)

We are a newly organized commercial real estate finance corporation that has been formed to primarily originate, acquire and manage a diversified portfolio of commercial real estate first mortgage loans secured by income-producing properties. To a lesser extent, we expect to invest in senior classes of investment grade commercial mortgage-backed securities, or senior CMBS, and originate and acquire other commercial real estate-related debt instruments. We expect that over time most of our investment activity will take the form of first mortgage originations. However, we may initially allocate a significant portion of our net proceeds to senior CMBS designed to opportunistically take advantage of the Term Asset Backed Securities Loan Facility, or the TALF. We collectively refer to the assets that we intend to originate, acquire and manage as our target assets. We are a newly organized commercial real estate finance corporation that has been formed to primarily originate, acquire and manage a diversified portfolio of commercial real estate first mortgage loans secured by income-producing properties. To a lesser extent, we expect to invest in senior classes of investment grade commercial mortgage-backed securities, or senior CMBS, and originate and acquire other commercial real estate-related debt instruments. We expect that over time most of our investment activity will take the form of first mortgage originations. However, we may initially allocate a significant portion of our net proceeds to senior CMBS designed to opportunistically take advantage of the Term Asset Backed Securities Loan Facility, or the TALF. We collectively refer to the assets that we intend to originate, acquire and manage as our target assets.

Offering: 20 million shares at $20 per share. Net proceeds are estimated to total approximately $384.0 million. According to the company:

We intend to deploy the net proceeds of this offering and the concurrent private placement predominantly in our target assets. Based upon existing market conditions, we currently expect the proceeds of this offering and the concurrent private placement to be invested in our portfolio of assets at the end of our first year of operations to be comprised of between 60% to 90% of first mortgage loans with substantially all of such first mortgage loans being originated by us, 0% to 20% of senior CMBS, 5% to 15% of cash and other target assets, and 0% to 15% of non-core assets.

Lead Underwriters: J.P. Morgan (JPM), Wells Fargo Securities (WFC), Citi (C)

Financial Highlights:

We have not commenced any significant operations because we are in our organizational stage. We will not commence any significant operations until we have completed this offering and the concurrent private placement.

Competitors:

In acquiring our target assets, we will compete with other REITs, specialty finance companies, savings and loan associations, banks, mortgage bankers, insurance companies, mutual funds, institutional investors, including the Ladder Capital Group, investment banking firms, financial institutions, governmental bodies and other entities, including other Ladder Capital vehicles. See “—Market opportunity.” In addition, there are numerous REITs with similar business objectives, including a number that have been recently formed, and others may be organized in the future. These other REITs will increase competition for the available supply of mortgage assets suitable for purchase and origination.

Comments

[John Gault:]

Cohen & Steers can't afford to deflect any capital from propping up SPG and TCO.

The REIT rally is dead.

Sep 30 03:49 PM