191

(8,799)

(8,537)

(262)

14,761

(40,000)

Re-issuance of treasury stock (in shares)

(637)

68,000

Shares acquired to satisfy minimum required federal and state tax withholding on vesting restricted stock and units (in shares)

(461,000)

Shares acquired to satisfy minimum required federal and state tax withholding on vesting restricted stock and units

(8,083)

(9,000)

Grants of restricted stock (in shares)

(72,785)

1,478,000

Grants of restricted stock

$ 1

(1)

60,604

54,419

6,939

(754)

Rebalancing of ownership percentage between Company and Operating Partnership

18,782

16,738

2,044

281

17

(298)

Exchange of noncontrolling interest for common stock (in shares)

1,139,411

(1,139,411)

1,139,000

(1,139,000)

Exchange of noncontrolling interest for common stock

405

$ 1

$ (1)

16,449

65

(16,109)

Stock dividends (in shares)

1,435,000

180,000

Stock dividends

$ 1

23,822

(23,823)

Ending Balance (in shares) at Jun. 30, 2019

107,551,000

12,159,000

Ending Balance at Jun. 30, 2019

1,648,074

$ 108

$ 12

1,526,469

(41,535)

(30,847)

12,171

172,466

9,230

Beginning Balance (in shares) at Mar. 31, 2019

106,562,000

13,198,000

Beginning Balance at Mar. 31, 2019

1,644,243

$ 107

$ 13

1,508,452

(40,799)

(26,549)

7,080

186,310

9,629

114

(4,490)

(4,284)

(206)

3,469

(40,000)

Re-issuance of treasury stock (in shares)

(637)

5,000

Shares acquired to satisfy minimum required federal and state tax withholding on vesting restricted stock and units (in shares)

(6,000)

Shares acquired to satisfy minimum required federal and state tax withholding on vesting restricted stock and units

(99)

(9,000)

(36,542)

36,073

32,244

4,136

(307)

Rebalancing of ownership percentage between Company and Operating Partnership

5,589

5,007

582

(408)

14

394

Exchange of noncontrolling interest for common stock (in shares)

1,039,000

(1,039,000)

Exchange of noncontrolling interest for common stock

354

$ 1

$ (1)

14,956

70

(14,672)

Ending Balance (in shares) at Jun. 30, 2019

107,551,000

12,159,000

Ending Balance at Jun. 30, 2019

1,648,074

$ 108

$ 12

1,526,469

(41,535)

(30,847)

12,171

172,466

9,230

Beginning Balance (in shares) at Dec. 31, 2019

107,509,000

12,160,000

Beginning Balance at Dec. 31, 2019

1,638,977

^[1]

$ (5,797)

$ 108

$ 12

1,532,384

(42,699)

(35,746)

$ (5,797)

4,218

172,054

8,646

651

Issuance of purchase right

(9,996)

(6,332)

(3,664)

8,425

16,738

(210,000)

Re-issuance of treasury stock (in shares)

(1,688)

1,466,000

Re-issuance of treasury stock

$ 1

(1)

Shares acquired to satisfy minimum required federal and state tax withholding on vesting restricted stock and units (in shares)

(505,000)

Shares acquired to satisfy minimum required federal and state tax withholding on vesting restricted stock and units

(9,232)

$ 0

(9,232)

(24,000)

(58,621)

(19,254)

(19,918)

(605)

1,269

Rebalancing of ownership percentage between Company and Operating Partnership

(51,884)

(46,530)

(5,354)

(916)

2,147

(1,231)

Exchange of noncontrolling interest for common stock (in shares)

6,779,000

(6,779,000)

Exchange of noncontrolling interest for common stock

61

$ 7

$ (7)

92,540

(4,915)

(87,564)

Ending Balance (in shares) at Jun. 30, 2020

115,015,000

5,381,000

Ending Balance at Jun. 30, 2020

1,508,380

^[1]

$ 116

$ 5

1,649,170

(53,619)

(120,082)

(45,080)

70,968

6,902

Beginning Balance (in shares) at Mar. 31, 2020

108,337,000

12,160,000

Beginning Balance at Mar. 31, 2020

1,500,827

$ 109

$ 12

1,546,143

(52,983)

(94,171)

(65,920)

160,466

7,171

349

Issuance of purchase right

(2,566)

(2,198)

(368)

8,425

2,712

(64,000)

Shares acquired to satisfy minimum required federal and state tax withholding on vesting restricted stock and units (in shares)

(482)

(19,000)

Shares acquired to satisfy minimum required federal and state tax withholding on vesting restricted stock and units

(154)

(18,000)

(21,722)

(5,193)

(4,189)

(754)

(250)

Rebalancing of ownership percentage between Company and Operating Partnership

26,123

23,612

2,511

0

(650)

2,143

(1,493)

Exchange of noncontrolling interest for common stock (in shares)

6,779,000

(6,779,000)

Exchange of noncontrolling interest for common stock

$ 7

$ (7)

92,540

(4,915)

(87,564)

Ending Balance (in shares) at Jun. 30, 2020

115,015,000

5,381,000

Ending Balance at Jun. 30, 2020

$ 1,508,380

^[1]

$ 116

$ 5

$ 1,649,170

$ (53,619)

$ (120,082)

$ (45,080)

$ 70,968

$ 6,902

[1]	Includes amounts relating to consolidated variable interest entities. See Note 1 and Note 10.

Consolidated Statements of Cash Flows - USD ($)	6 Months Ended
Consolidated Statements of Cash Flows - USD ($)	Jun. 30, 2020	Jun. 30, 2019
Cash flows from operating activities:
Net income (loss)	$ (19,254,000)	$ 60,604,000
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
(Gain) loss on extinguishment/defeasance of debt	(21,077,000)	1,070,000
Depreciation and amortization	19,825,000	20,162,000
Unrealized (gain) loss on derivative instruments	187,000	(1,511,000)
Unrealized (gain) loss on equity securities	132,000	(1,088,000)
Unrealized (gain) loss on Agency interest-only securities	(174,000)	(22,000)
Provision for loan losses	25,852,000	600,000
Impairment of real estate	0	1,350,000
Amortization of equity based compensation	16,738,000	14,761,000
Amortization of deferred financing costs included in interest expense	7,705,000	5,721,000
Amortization of premium on mortgage loan financing	(587,000)	(774,000)
Amortization of above- and below-market lease intangibles	(1,187,000)	(397,000)
Amortization of premium/(accretion) of discount and other fees on loans	(8,917,000)	(10,294,000)
Amortization of premium/(accretion) of discount and other fees on securities	443,000	(87,000)
Realized (gain) loss on sale of mortgage loan receivables held for sale	(6,926,000)	(27,342,000)
Realized (gain) loss on sale of mortgage loan receivables held for investment	6,665,000	0
Realized (gain) loss on disposition of loan	51,000	0
Realized (gain) loss on securities	12,512,000	(7,329,000)
Realized (gain) loss on sale of real estate, net	(10,528,000)	1,119,000
Realized gain on sale of derivative instruments	(211,000)	108,000
Origination of mortgage loan receivables held for sale	(212,845,000)	(333,342,000)
Repayment of mortgage loan receivables held for sale	292,000	370,000
Proceeds from sales of mortgage loan receivables held for sale	255,827,000	430,649,000
(Income) loss from investments in unconsolidated joint ventures in excess of distributions received	(912,000)	(2,522,000)
Distributions from operations of investment in unconsolidated joint ventures	0	3,067,000
Deferred tax asset (liability)	9,914,000	6,336,000
Changes in operating assets and liabilities:
Accrued interest receivable	2,284,000	2,705,000
Other assets	(15,361,000)	(6,310,000)
Accrued expenses and other liabilities	(16,900,000)	(24,805,000)
Net cash provided by (used in) operating activities	43,453,000	132,545,000
Cash flows from investing activities:
Origination of mortgage loan receivables held for investment	(334,347,000)	(484,496,000)
Repayment of mortgage loan receivables held for investment	437,525,000	781,916,000
Purchases of real estate securities	(438,546,000)	(827,999,000)
Repayment of real estate securities	63,032,000	110,443,000
Basis recovery of Agency interest-only securities	3,853,000	6,413,000
Proceeds from sales of real estate securities	532,460,000	384,356,000
Purchases of real estate	(6,239,000)	(5,071,000)
Capital improvements of real estate	(1,980,000)	(1,707,000)
Proceeds from sale of real estate	11,426,000	8,521,000
Capital contributions and advances to investment in unconsolidated joint ventures	0	(56,424,000)
Capital distribution from investment in unconsolidated joint ventures	426,000	38,625,000
Capitalization of interest on investment in unconsolidated joint ventures	0	(142,000)
Purchase of FHLB stock	0	(3,704,000)
Purchase of derivative instruments	(111,000)	(159,000)
Sale of derivative instruments	446,000	50,000
Net cash provided by (used in) investing activities	433,309,000	(49,378,000)
Cash flows from financing activities:
Deferred financing costs paid	(17,370,000)	(4,453,000)
Proceeds from borrowings under debt obligations	8,046,797,000	6,377,515,000
Repayment of borrowings under debt obligations	(7,902,356,000)	(6,213,678,000)
Cash dividends paid to Class A common shareholders	(73,735,000)	(108,240,000)
Payment of liability assumed in exchange for shares for the minimum withholding taxes on vesting restricted stock	(9,232,000)	(8,083,000)
Purchase of treasury stock	(1,688,000)	(637,000)
Issuance of purchase right	8,425,000	0
Net cash provided by (used in) financing activities	41,496,000	33,816,000
Net increase (decrease) in cash, cash equivalents and restricted cash	518,258,000	116,983,000
Cash, cash equivalents and restricted cash at beginning of period	355,746,000	98,450,000
Cash, cash equivalents and restricted cash at end of period	874,004,000	215,433,000
Supplemental information:
Cash paid for interest, net of amounts capitalized	98,220,000	98,832,000
Cash paid (received) for income taxes	(38,000)	3,591,000
Non-cash investing and financing activities:
Repayment in transit of mortgage loans receivable held for investment (other assets)	9,078,000	0
Repayment of mortgage loans receivable held for sale	0	127,000
Settlement of mortgage loan receivable held for investment by real estate, net	(25,177,000)	(17,851,000)
Transfer from mortgage loans receivable held for sale to mortgage loans receivable held for investment, net, at amortized cost	0	15,504,000
Real estate acquired in settlement of mortgage loan receivable held for investment, net	25,435,000	17,851,000
Net settlement of sale of real estate, subject to debt - real estate	(19,098,000)	(7,144,000)
Net settlement of sale of real estate, subject to debt - debt obligations	19,098,000	7,144,000
Exchange of noncontrolling interest for common stock	87,571,000	16,109,000
Change in deferred tax asset related to exchanges of noncontrolling interest for common stock	61,000	0
Increase in amount payable pursuant to tax receivable agreement	0	(11,000)
Rebalancing of ownership percentage between Company and Operating Partnership	(1,231,000)	(298,000)
Dividends declared, not paid	23,583,000	1,860,000
Stock dividends	0	23,823,000
Total cash, cash equivalents and restricted cash shown in the consolidated statement of cash flows	874,004,000	215,433,000
Proceeds From Sale Of Mortgage Loans Held-For-Investment	165,364,000	0
Consolidated Joint Venture
Cash flows from financing activities:
Capital contributed by noncontrolling interests in consolidated joint ventures	651,000	191,000
Capital distributed to noncontrolling interests	(3,664,000)	(262,000)
Operating Partnership
Cash flows from financing activities:
Capital distributed to noncontrolling interests	(6,332,000)	(8,537,000)
Equity Securities
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Unrealized (gain) loss on equity securities	132,000	(1,088,000)
Mutual Fund
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Unrealized (gain) loss on equity securities	$ (95,000)	$ (254,000)

ORGANIZATION AND OPERATIONS	6 Months Ended
ORGANIZATION AND OPERATIONS	Jun. 30, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]
ORGANIZATION AND OPERATIONS	1. ORGANIZATION AND OPERATIONS Ladder Capital Corp is an internally-managed real estate investment trust (“REIT”) that is a leader in commercial real estate finance. Ladder originates and invests in a diverse portfolio of commercial real estate and real estate-related assets, focusing on senior secured assets. Ladder’s investment activities include: (i) direct origination of commercial real estate first mortgage loans; (ii) investments in investment grade securities secured by first mortgage loans on commercial real estate; and (iii) investments in net leased and other commercial real estate equity. Ladder Capital Corp, as the general partner of Ladder Capital Finance Holdings LLLP (“LCFH,” “Predecessor” or the “Operating Partnership”), operates the Ladder Capital business through LCFH and its subsidiaries. As of June 30, 2020, Ladder Capital Corp has a 95.5% economic interest in LCFH and controls the management of LCFH as a result of its ability to appoint its board members. Accordingly, Ladder Capital Corp consolidates the financial results of LCFH and its subsidiaries and records a noncontrolling interest for the economic interest in LCFH held by certain existing owners of LCFH, who were limited partners of LCFH prior to Ladder Capital Corp’s initial public offering (“IPO”) and continue to hold an economic interest in LCFH and voting shares of Ladder Capital Corp Class B common stock (the “Continuing LCFH Limited Partners”). LCFH is a Variable Interest Entity (“VIE”) and, as such, substantially all of the consolidated balance sheet is a consolidated VIE. In addition, Ladder Capital Corp, through certain subsidiaries which are treated as taxable REIT subsidiaries (each a “TRS”), is indirectly subject to U.S. federal, state and local income taxes. Other than the noncontrolling interest in the Operating Partnership and such indirect U.S. federal, state and local income taxes, there are no material differences between Ladder Capital Corp’s consolidated financial statements and LCFH’s consolidated financial statements. Ladder Capital Corp was formed as a Delaware corporation on May 21, 2013. The Company conducted its IPO which closed on February 11, 2014. The Company used the net proceeds from the IPO to purchase newly issued limited partnership units (“LP Units”) from LCFH. In connection with the IPO, Ladder Capital Corp also became a holding corporation and the general partner of, and obtained a controlling interest in, LCFH. Ladder Capital Corp’s only business is to act as the general partner of LCFH, and, as such, Ladder Capital Corp indirectly operates and controls all of the business and affairs of LCFH and its subsidiaries. The IPO transactions described herein are referred to as the “IPO Transactions.” Pursuant to LCFH’s Third Amended and Restated LLLP Agreement, dated as of December 31, 2014 and as amended, and subject to the applicable minimum retained ownership requirements and certain other restrictions, including notice requirements, Continuing LCFH Limited Partners (or certain transferees thereof) may, subject to certain conditions, receive one share of the Company’s Class A common stock in exchange for (i) one share of the Company’s Class B common stock, (ii) one Series REIT LP Unit and (iii) either one Series TRS LP Unit or one TRS Share, subject to equitable adjustments for stock splits, stock dividends and reclassifications. However, such exchange for shares of Ladder Capital Corp Class A common stock will not affect the exchanging owners’ voting power since the votes represented by the canceled shares of Ladder Capital Corp Class B common stock will be replaced with the votes represented by the shares of Class A common stock for which such Series Units, including TRS Shares as applicable, will be exchanged. As a result of the Company’s ownership interest in LCFH and LCFH’s election under Section 754 of the Code, the Company expects to benefit from depreciation and other tax deductions reflecting LCFH’s tax basis for its assets. Those deductions will be allocated to the Company and will be taken into account in reporting the Company’s taxable income. COVID-19 Impact on the Organization On March 11, 2020, the World Health Organization declared the novel strain of coronavirus (“COVID-19”) a global pandemic and recommended containment and mitigation measures worldwide. As of the date of this filing, the majority of our employees continue to work remotely. We continue to actively manage the liquidity and operations of the Company in light of the market disruption caused by, and the overall financial impact of, the COVID-19 pandemic across most industries in the United States. Due to the uncertainty related to the severity and duration of the pandemic, its ultimate impact on our revenues, profitability and financial position is difficult to assess at this time. Refer to the Notes to the Consolidated Financial Statements for further disclosure on the current and potential impact of the COVID-19 global pandemic on our business.

SIGNIFICANT ACCOUNTING POLICIES	6 Months Ended
SIGNIFICANT ACCOUNTING POLICIES	Jun. 30, 2020
Accounting Policies [Abstract]
SIGNIFICANT ACCOUNTING POLICIES	2. SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The Company conducted a more extensive going concern analysis as a result of market conditions at June 30, 2020. As the COVID-19 crisis evolved, management implemented a plan to increase liquidity resources and pay down debt. The Company maintained an unrestricted cash position of $826.1 million as of June 30, 2020 to mitigate uncertainty in liquidity needs in light of market conditions and, during the three months ended June 30, 2020, the Company paid down over $1.0 billion of mark-to-market debt. As of March 31, 2020, partly as a result of maintaining higher levels of cash, the Company was not in compliance with its 3.5x covenant ratio with certain of its lenders; however, the Company cured such non-compliance through pay downs of debt with various counterparties during the cure period. The Company was in compliance with all financial covenants as of June 30, 2020 (refer to Note 7, Debt Obligations, Net). Management has evaluated current market conditions and expects that the Company’s current cash resources, operating cash flows and ability to obtain financing will be sufficient to sustain operations for a period greater than one year from the issuance date of this Quarterly Report. The Company incurred $2.1 million of professional fees, included in operating expenses, and $0.2 million of severance costs, included in salaries and employee benefits, due to measures implemented to date in direct response to the COVID-19 pandemic. Basis of Accounting and Principles of Consolidation The accompanying consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). In the opinion of management, the unaudited financial information for the interim periods presented in this report reflects all normal and recurring adjustments necessary for a fair statement of results of operations, financial position and cash flows. The interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2019, which are included in the Annual Report, as certain disclosures that would substantially duplicate those contained in the audited consolidated financial statements have not been included in this interim report. Operating results for interim periods are not necessarily indicative of operating results for an entire fiscal year. The consolidated financial statements include the Company’s accounts and those of its subsidiaries which are majority-owned and/or controlled by the Company and variable interest entities for which the Company has determined itself to be the primary beneficiary, if any. All significant intercompany transactions and balances have been eliminated. Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 810 — Consolidation (“ASC 810”), provides guidance on the identification of entities for which control is achieved through means other than voting rights (“variable interest entities” or “VIEs”) and the determination of which business enterprise, if any, should consolidate the VIEs. Generally, the consideration of whether an entity is a VIE applies when either: (1) the equity investors (if any) lack one or more of the essential characteristics of a controlling financial interest; (2) the equity investment at risk is insufficient to finance that entity’s activities without additional subordinated financial support; or (3) the equity investors have voting rights that are not proportionate to their economic interests and the activities of the entity involve or are conducted on behalf of an investor with a disproportionately small voting interest. The Company consolidates VIEs in which it is considered to be the primary beneficiary. The primary beneficiary is the entity that has both of the following characteristics: (1) the power to direct the activities that, when taken together, most significantly impact the VIE’s performance; and (2) the obligation to absorb losses and right to receive the returns from the VIE that would be significant to the VIE. Provision for Loan Losses The provision for loan losses reflects the Company’s estimate of loan losses inherent in the loan portfolio as of the balance sheet date. The provision for loan losses includes a portfolio-based, current expected credit loss (“CECL”) component and an asset-specific component. In compliance with the new CECL reporting requirements, the Company has supplemented the existing credit monitoring and management processes with additional processes to support the calculation of the CECL reserves. As part of that effort, the Company has engaged a third-party service provider to provide market data and a credit loss model. The credit loss model is a forward-looking, econometric, commercial real estate (“CRE”) loss forecasting tool. It is comprised of a probability of default (“PD”) model and a loss given default (“LGD”) model that, layered together with user’s loan-level data, selected forward-looking macroeconomic variables, and pool-level mean loss rates, produces life of loan expected losses (“EL”) at the loan and portfolio level. The asset-specific reserve component relates to reserves for losses on individually impaired loans. The Company evaluates each loan for impairment at least quarterly. Impairment occurs when it is deemed probable that the Company will not be able to collect all amounts due according to the contractual terms of the loan. If the loan is considered to be impaired, an allowance is recorded to reduce the carrying value of the loan to the present value of the expected future cash flows discounted at the loan’s effective rate or the fair value of the collateral, less the estimated costs to sell, if recovery of the Company’s investment is expected solely from the collateral. The Company generally will use the direct capitalization rate valuation methodology or the sales comparison approach to estimate the fair value of the collateral for such loans and in certain cases will obtain external appraisals. Determining fair value of the collateral may take into account a number of assumptions including, but not limited to, cash flow projections, market capitalization rates, discount rates and data regarding recent comparable sales of similar properties. Such assumptions are generally based on current market conditions and are subject to economic and market uncertainties. The Company’s loans are typically collateralized by real estate directly or indirectly. As a result, the Company regularly evaluates the extent and impact of any credit deterioration associated with the performance and/or value of the underlying collateral property as well as the financial and operating capability of the borrower/sponsor on a loan-by-loan basis. Specifically, a property’s operating results and any cash reserves are analyzed and used to assess (i) whether cash flow from operations is sufficient to cover the debt service requirements currently and into the future, (ii) the ability of the borrower to refinance the loan at maturity, and/or (iii) the property’s liquidation value. The Company also evaluates the financial wherewithal of any loan guarantors as well as the borrower’s competency in managing and operating the properties. In addition, the Company considers the overall economic environment, real estate sector, and geographic submarket in which the collateral property is located. Such impairment analyses are completed and reviewed by asset management and underwriting personnel, who utilize various data sources, including (i) periodic financial data such as property occupancy, tenant profile, rental rates, operating expenses, the borrowers’ business plan, and capitalization and discount rates, (ii) site inspections, and (iii) current credit spreads and other market data and ultimately presented to management for approval. A loan is also considered impaired if its terms are modified in a troubled debt restructuring (“TDR”). A TDR occurs when a concession is granted and the debtor is experiencing financial difficulties. Impairments on TDR loans are generally measured based on the present value of expected future cash flows discounted at the effective interest rate of the original loans. Generally, when granting concessions, the Company will seek to protect its position by requiring incremental pay downs, additional collateral or guarantees and, in some cases, lookback features or equity interests to offset concessions granted should conditions impacting the loan improve. The Company’s determination of credit losses is impacted by TDRs whereby loans that have gone through TDRs are considered impaired, assessed for specific reserves, and are not included in the Company’s assessment of the CECL reserve. Loans previously restructured under TDRs that subsequently default are reassessed to incorporate the Company’s current assumptions on expected cash flows and additional provision expense is recorded to the extent necessary. The Company designates non-accrual loans at such time as (i) loan payments become 90-days past due or (ii) in the opinion of the Company, it is probable the Company will be unable to collect all amounts due according to the contractual terms of the loan. Income recognition will be suspended when a loan is designated non-accrual and resumed only when the suspended loan becomes contractually current and performance is demonstrated to have resumed. Any interest received for loans on non-accrual status will be applied as a reduction to the unpaid principal balance. A loan will be written off when it is no longer realizable and legally discharged. Recently Adopted Accounting Pronouncements In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13 Financial Instruments - Credit Losses - Measurement of Credit Losses on Financial Instruments (Topic 326) (“ASU 2016-13”) and in April 2019, the FASB issued ASU 2019-04 Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments (“ASU 2019-04”), collectively, the “CECL Standard.” These updates change how entities measure potential credit losses for most financial assets and certain other instruments that are not measured at fair value. The CECL Standard replaced the “incurred loss” approach under previous guidance with an “expected loss” model for instruments measured at amortized cost. The net carrying value of an asset under the CECL Standard is intended to represent the amount expected to be collected on such asset and requires entities to deduct allowances for potential losses on held-to-maturity debt securities. The Company will continue to record asset-specific reserves consistent with our existing accounting policy. In addition, the Company will now record a general reserve in accordance with the CECL Standard on the remainder of the loan portfolio (“CECL Reserve”). At adoption, on January 1, 2020, the Company recorded a CECL Reserve of $11.6 million, which equated to 0.36% of $3.2 billion carrying value of its held for investment loan portfolio. This reserve excluded three loans that previously had an aggregate of $14.7 million of asset-specific reserves and a carrying value of $39.8 million as of January 1, 2020. Upon adoption, the aggregated CECL Reserve reduced total shareholder’s equity by $5.8 million (or approximately $0.05 of book value per share of common stock). In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement, (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement, (“ASU 2018-13”). ASU 2018-13 eliminates, adds and modifies certain disclosure requirements for fair value measurements as part of its disclosure framework project. The standard is effective for all entities for financial statements issued for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The adoption of ASU 2018-13 had no material impact on the Company’s consolidated financial statements. In October 2018, the FASB issued ASU 2018-17, Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities, (“ASU 2018-17”). ASU 2018-17 requires reporting entities to consider indirect interests held through related parties under common control on a proportional basis rather than as the equivalent of a direct interest in its entirety for determining whether a decision-making fee is a variable interest. The standard is effective for all entities for financial statements issued for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted. Entities are required to apply the amendments in ASU 2018-17 retrospectively with a cumulative-effect adjustment to retained earnings at the beginning of the earliest period presented. The adoption of ASU 2018-17 had no material impact on the Company’s consolidated financial statements. In April 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, (“ASU 2019-04”). ASU 2019-04 clarifies and improves areas of guidance related to the recently issued standards on credit losses (ASU 2016-13), hedging (ASU 2017-12), and recognition and measurement of financial instruments (ASU 2016-01). The amendments generally have the same effective dates as their related standards. If already adopted, the amendments of ASU 2016-01 and ASU 2016-13 are effective for fiscal years beginning after December 15, 2019 and the amendments of ASU 2017-12 are effective as of the beginning of the Company’s next annual reporting period; early adoption is permitted. The Company previously adopted ASU 2016-01. The adoption of ASU 2019-04 had no material impact on the Company’s consolidated financial statements. In March 2020, the FASB issued ASU 2020-03, Codification Improvements to Financial Instruments, (“ASU 2020-03”). ASU 2020-03 improves various financial instruments topics, including the CECL Standard. ASU 2020-03 includes seven different issues that describe the areas of improvement and the related amendments to GAAP, intended to make the standards easier to understand and apply by eliminating inconsistencies and providing clarifications. The amendments related to Issue 1, Issue 2, Issue 4 and Issue 5 were effective upon issuance of ASU 2020-03. The amendments related to Issue 3, Issue 6 and Issue 7 were effective for the Company beginning on January 1, 2020. The adoption of ASU 2020-03 had no material impact on the Company’s consolidated financial statements. In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, (“ASU 2020-04”). ASU 2020-04 provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform. ASU 2020-04 is effective upon issuance of ASU 2020-04 for contract modifications and hedging relationships on a prospective basis. While the Company is currently assessing the impact of ASU 2020-04, the Company does not expect the adoption to have a material impact on its consolidated financial statements. Recent Accounting Pronouncements Pending Adoption In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 815), (“ASU 2019-12”). ASU 2019-12 simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. ASU 2019-12 also improves the consistent application of, and simplifies, GAAP for other areas of Topic 740 by clarifying and amending existing guidance. The standard is effective for all entities for financial statements issued for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. Early adoption is permitted. The Company does not expect the adoption of ASU 2019-12 to have a material impact on its consolidated financial statements. Any new accounting standards not disclosed above that have been issued or proposed by FASB and that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption.

MORTGAGE LOAN RECEIVABLES

6 Months Ended

Jun. 30, 2020

SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Abstract]

MORTGAGE LOAN RECEIVABLES

3. MORTGAGE LOAN RECEIVABLES

June 30, 2020 ($ in thousands)


	Outstanding Face Amount		Carrying Value		Weighted Average Yield (1)		Remaining Maturity (years)

Mortgage loan receivables held for investment, net, at amortized cost:
Mortgage loans held by consolidated subsidiaries:
First mortgage loans	$	2,848,829	$	2,832,610	6.65	%	1.15
Mezzanine loans	122,793		122,474		10.84	%	2.91
Total mortgage loans held by consolidated subsidiaries	2,971,622		2,955,084		6.82	%	1.22


Allowance for loan losses	N/A		(49,102)
Total mortgage loan receivables held for investment, net, at amortized cost	2,971,622		2,905,982
Mortgage loan receivables held for sale:
First mortgage loans	86,456		85,977		3.94	%	9.70
Total	$	3,058,078	$	2,991,959	6.85	%	1.48

(1)June 30, 2020 LIBOR rates are used to calculate weighted average yield for floating rate loans.

As of June 30, 2020, $2.4 billion, or 80.8%, of the outstanding face amount of our mortgage loan receivables held for investment, net, at amortized cost, were at variable interest rates, linked to LIBOR. Of this $2.4 billion, 100% of these variable interest rate mortgage loan receivables were subject to interest rate floors. As of June 30, 2020, $86.5 million, or 100%, of the outstanding face amount of our mortgage loan receivables held for sale were at fixed interest rates.

December 31, 2019 ($ in thousands)


	Outstanding Face Amount		Carrying Value		Weighted Average Yield (1)		Remaining Maturity (years)

Mortgage loan receivables held for investment, net, at amortized cost:
Mortgage loans held by consolidated subsidiaries:
First mortgage loans	$	3,147,275	$	3,127,173	6.77	%	1.35
Mezzanine loans	130,322		129,863		10.97	%	3.26
Total mortgage loans held by consolidated subsidiaries	3,277,597		3,257,036		6.94	%	1.43


Allowance for loan losses	N/A		(20,500)
Total mortgage loan receivables held for investment, net, at amortized cost	3,277,597		3,236,536
Mortgage loan receivables held for sale:
First mortgage loans	122,748		122,325		4.20	%	9.99
Total	$	3,400,345	$	3,358,861	6.88	%	1.75

(1)December 31, 2019 LIBOR rates are used to calculate weighted average yield for floating rate loans.

As of December 31, 2019, $2.5 billion, or 77.2%, of the outstanding principal of our mortgage loan receivables held for investment, net, at amortized cost, were at variable interest rates, linked to LIBOR or a replacement index generally determined in our discretion. Of this $2.5 billion, 100% of these variable rate mortgage loan receivables were subject to interest rate floors. As of December 31, 2019, $122.7 million, or 100%, of the carrying value of our mortgage loan receivables held for sale were at fixed interest rates.

For the six months ended June 30, 2020 and 2019, the activity in our loan portfolio was as follows ($ in thousands):


	Mortgage loan receivables held for investment, net, at amortized cost:
	Mortgage loans held by consolidated subsidiaries		Provision expense for current expected credit loss		Mortgage loan receivables held for sale

Balance, December 31, 2019	$	3,257,036	$	(20,500)	$	122,325
Origination of mortgage loan receivables	334,347		—		212,845

Repayment of mortgage loan receivables	(446,080)		—		(292)
Proceeds (losses) from sales of mortgage loan receivables	(165,364)		—		(255,827)
Non-cash disposition of loans via foreclosure(1)	(27,107)		—		—
Sale of loans, net	(6,665)		—		6,926

Accretion/amortization of discount, premium and other fees	8,917		—		—
Release of asset-specific loan loss provision via foreclosure(1)	—		2,000
Provision expense for current expected credit loss (implementation impact)(2)	—		(4,964)
Provision expense for current expected credit loss, net (impact to earnings)(2)	—		(17,638)
Additional asset-specific reserve	—		(8,000)		—
Balance, June 30, 2020	$	2,955,084	$	(49,102)	$	85,977

(1)Refer to Note 5 Real Estate and Related Lease Intangibles, Net for further detail on foreclosure of real estate.

(2)During the six months ended June 30, 2020, the initial impact of the implementation of the CECL accounting standard as of January 1, 2020 is recorded against retained earnings. Subsequent remeasurement thereafter, including the period to date change for the six months ended June 30, 2020, is accounted for as provision expense for current expected credit loss in the consolidated statements of income.


	Mortgage loan receivables held for investment, net, at amortized cost:
	Mortgage loans held by consolidated subsidiaries		Mortgage loans transferred but not considered sold		Provision for loan losses		Mortgage loan receivables held for sale

Balance, December 31, 2018	$	3,318,390	$	—	$	(17,900)	$	182,439
Origination of mortgage loan receivables	484,496		—		—		333,342

Repayment of mortgage loan receivables	(693,323)		—		—		(497)
Proceeds from sales of mortgage loan receivables	—		(15,504)		—		(415,145)

Sale of loans, net	—		—		—		27,342
Transfer between held for investment and held for sale(1)	—		15,504		—		(15,504)
Accretion/amortization of discount, premium and other fees	10,294		—		—		—
Provision for/(release of) loan loss reserves	—		—		(600)		—
Balance, June 30, 2019	$	3,119,857	$	—	$	(18,500)	$	111,977

(1)We sell certain loans into securitizations; however, for a transfer of financial assets to be considered a sale, the transfer must meet the sale criteria of ASC 860 under which the Company must surrender control over the transferred assets which must qualify as recognized financial assets at the time of transfer. The assets must be isolated from the Company, even in bankruptcy or other receivership, the purchaser must have the right to pledge or sell the assets transferred and the Company may not have an option or obligation to reacquire the assets. If the sale criteria are not met, the transfer is considered to be a secured borrowing, the assets remain on the Company’s consolidated balance sheets and the sale proceeds are recognized as a liability. During the three months ended March 31, 2019, the Company reclassified from mortgage loan receivables held for sale to mortgage loans transferred but not considered sold, at amortized cost, one loan with an outstanding face amount of $15.4 million, a book value of $15.5 million (fair value at the date of reclassification) and a remaining maturity of 9.8 years, which was sold to the WFCM 2019-C49 securitization trust. Subsequent to March 31, 2019, the controlling loan interest was sold to the UBS 2019-C16 securitization trust, and as a result, the loan previously sold during the three months ended March 31, 2019 was accounted for as a sale during the six months ended June 30, 2019.

During the three and six months ended June 30, 2020, the transfers of financial assets via sales of loans were treated as sales under ASC Topic 860 — Transfers and Servicing. During the three and six months ended June 30, 2019, the transfers of financial assets via sales of loans were treated as sales under ASC Topic 860 — Transfers and Servicing, except for the one loan discussed above.

As of June 30, 2020 and December 31, 2019, there was $0.4 million of unamortized discounts included in our mortgage loan receivables held for investment, net, at amortized cost, on our consolidated balance sheets.

Allowance for Loan Losses and Non-Accrual Status ($ in thousands)


	Three Months Ended June 30,								Six Months Ended June 30,
	2020			2019			2020		2019

Allowance for loan losses at beginning of period	$	49,457		$	18,200		$	20,500	$	17,900
Provision expense for current expected credit loss (implementation impact)	—			—			4,964		—
Provision expense for current expected credit loss, net (impact to earnings)	(355)			300			17,638		600
Additional asset-specific reserve	—			—			8,000		—
Foreclosure of loans subject to asset-specific reserve	—			—			(2,000)		—


Allowance for loan losses at end of period	$	49,102		$	18,500		$	49,102	$	18,500

	June 30, 2020			December 31, 2019

Principal balance of loans on non-accrual status	$	185,896	(1)	$	98,725	(2)

(1)Represents two of the Company’s loans, which were originated simultaneously as part of a single transaction and had a combined carrying value of $26.9 million, two loans with a combined carrying value of $45.9 million, one loan with a carrying value of $61.5 million, one loan with a carrying value of $4.1 million, one loan with a carrying value of $8.0 million and one loan with a carrying value of $39.5 million, as further discussed below.

(2)Represents two of the Company’s loans, which were originated simultaneously as part of a single transaction and had a combined carrying value of $26.9 million, one loan with a carrying value of $10.4 million and one loan with a carrying value of $61.5 million, as further discussed below.

Current Expected Credit Loss (“CECL”)

In compliance with the new CECL reporting requirements, the Company has supplemented the existing credit monitoring and management processes with additional processes to support the calculation of the CECL reserves. Based on the Company’s process, at adoption, on January 1, 2020, the Company recorded a CECL Reserve of $11.6 million, which equated to 0.36% of $3.2 billion carrying value of its held for investment loan portfolio. This reserve excluded three loans that previously had an aggregate of $14.7 million of asset-specific reserves and a carrying value of $39.8 million as of January 1, 2020. Upon adoption, the aggregated CECL Reserve reduced total shareholder’s equity by $5.8 million (or approximately $0.05 of book value per share of common stock). As of June 30, 2020, the Company released CECL reserves of $(0.7) million for a total CECL reserve of $29.4 million. This excludes five loans that previously had an aggregate of $20.7 million of asset-specific reserves and a carrying value of $76.9 million as of June 30, 2020. The change of $(0.7) million in the current quarter is reflected as a decrease on reserve provision expense of $(0.3) million, and a decrease in reserve on unfunded commitments of $(0.4) million. These decreases are primarily due to the decrease in the size of our loan portfolio, partially offset by an update of the macro economic assumptions used in the Company’s CECL evaluation in the current quarter.

The Company has concluded that none of its loans, other than the four loans discussed below, are individually impaired as of June 30, 2020.

Loan Portfolio by Geographic Region, Property Type and Vintage ($ in thousands)


	Amortized Cost
Geographic Region

Northeast	$	785,000
Southwest	588,046
Midwest	585,505
South	512,314
West	407,286
Subtotal loans	2,878,151
Individually impaired loans(1)	76,933
Total loans	$	2,955,084

Management’s method for monitoring credit is the performance of a loan. A loan is impaired or not impaired based on the expectation that all amounts contractually due under a loan will be collected when due. The primary credit quality indicator management utilizes to assess its current expected credit loss reserve is by viewing Ladder’s loan portfolio by collateral type. The following table summarizes the assessed amortized cost of the loan portfolio by property type ($ in thousands).


	Vintage
Property Type	2020		2019		2018		2017		2016 and Earlier		Total

Multifamily	$	65,228	$	323,178	$	147,460	$	31,872	$	11,772	$	579,510
Office	51,658		216,946		388,721		160,288		52,086		869,699
Hospitality	—		83,018		143,681		67,446		123,630		417,775
Mixed Use	52,515		101,436		5,092		47,849		—		206,892
Retail	—		141,842		25,029		—		65,823		232,694
Other	57,528		130,025		82,353		—		—		269,906
Industrial	51,964		114,987		—		—		6,476		173,427
Manufactured Housing	4,545		56,918		11,702		—		3,970		77,135
Self-Storage	—		35,936		15,177		—		—		51,113
Subtotal loans	283,438		1,204,286		819,215		307,455		263,757		2,878,151
Individually Impaired loans (1)	—		—		4,143				72,790		76,933
Total loans	$	283,438	$	1,204,286	$	823,358	$	307,455	$	336,547	$	2,955,084

(1)Included in individually impaired loans are two loans, which were originated in 2016 simultaneously as part of a single transaction with a combined amortized cost of $26.9 million, collateralized by a mixed use property located in the Northeast region, one loan, which was originated in 2016 and subsequently restructured into two loans in 2018, with a combined amortized cost of $45.9 million, collateralized by a mixed use property located in the Northeast region, and one loan, originated in 2018, with a amortized cost of $4.1 million, collateralized by a hotel located in the Midwest region. The above individually impaired loans’ amortized cost basis excludes asset-specific provisions totaling $20.7 million.

Individually Impaired Loans

As of June 30, 2020, two of the Company’s loans, collateralized by a mixed use property, which were originated simultaneously as part of a single transaction and had a carrying value of $26.9 million, were in default. These loans are directly and indirectly secured by the same property. The Company placed these loans on non-accrual status in July 2017. In assessing these collateral-dependent loans for impairment, the most significant consideration is the fair value of the underlying real estate collateral, which includes an in-place long-dated retail lease. The value of such property is most significantly affected by the contractual lease terms and the appropriate market capitalization rates, which are driven by the property’s market strength, the general interest rate environment and the retail tenant’s creditworthiness. In view of these considerations, the Company uses a direct capitalization rate valuation methodology to calculate the fair value of the underlying real estate collateral. During the three months ended March 31, 2018, management believed these loans to be impaired, reflecting a decline in collateral value attributable to: (i) on-going bankruptcy proceedings; (ii) rising interest rates; and (iii) the retail tenant’s creditworthiness. As a result, on March 31, 2018, the Company recorded an asset-specific provision for loss on one of these loans, with a carrying value of $5.9 million, of $2.7 million to reduce the carrying value of these loans to the fair value of the property less the cost to foreclose and sell the property utilizing direct capitalization rates of 4.70% to 5.00%. As of June 30, 2020, the Company believed no additional loss provision was necessary based on the application of direct capitalization rates of 4.60% to 4.90%.

During the year ended December 31, 2018, management identified a loan, secured by a mixed-use office and hospitality property, with a carrying value of $45.0 million as impaired, reflecting a decline in collateral value attributable to: (i) recent and near term tenant vacancies at the property; (ii) new information available during the three months ended September 30, 2018 regarding the addition of supply that will increase the local submarket vacancy rate; and (iii) declining market conditions. A reserve of $10.0 million was recorded for this impaired loan in the three months ended September 30, 2018 to reduce the carrying value of the loan to the estimated fair value of the collateral, less the estimated costs to sell. The Company has placed this loan on non-accrual status as of September 30, 2018. During the quarter ended December 31, 2018, this loan experienced a maturity default and its terms were modified in a Troubled Debt Restructuring (“TDR”) on October 17, 2018. The terms of the TDR provided for, among other things, the restructuring of the Company’s existing $45.0 million first mortgage loan into a $35.0 million A-Note and a $10.0 million B-Note and a 19.0% equity interest which is not subject to dilution and that can be increased to 25% under certain conditions. Under certain conditions, the B-Note may be forgiven or reduced. The reserve of $10.0 million was applied to the B-Note and the B-Note was placed on non-accrual status on October 17, 2018. During the quarter ended March 31, 2020, management identified that the A-Note was impaired, reflecting a decline in collateral value due to: (i) new information available during the three months ended March 31, 2020 regarding two recent non-distressed sales of office buildings in the Wilmington, DE central business district; (ii) a change in market conditions driven by COVID-19 as capital flow to the tertiary markets shifted given increased opportunities in primary markets; and (iii) the closure of the corporate housing component of the property. As a result, on March 31, 2020, the Company recorded an asset-specific provision for loss on the A-Note of $7.5 million to reduce the carrying value of this loan to the fair value of the property less the cost to foreclose and sell the property utilizing direct capitalization rates of 7.50% to 8.75%. The Company placed the A-Note on non-accrual status as of March 31, 2020. As of June 30, 2020, the combined carrying value of the A-Note and the B-Note was $45.9 million.

As of June 30, 2020, one of the Company’s loans, collateralized by a hotel property, with a carrying value of $4.1 million, was in default. The Company placed this loan on non-accrual status in March 2020. The Company filed for foreclosure in December 2019 and did not believe there was an impairment at that time. In assessing this collateral-dependent loan for impairment, the most significant consideration is the fair value of the underlying real estate collateral. During the quarter ended March 31, 2020, management identified that the loan was impaired, reflecting a decline in collateral value due to indications of value from market participants with knowledge of the asset and the temporary closure of the nearby university and local businesses due to COVID-19. As a result, on March 31, 2020, the Company recorded an asset-specific provision for loss of $0.5 million to reduce the carrying value of this loan to the fair value of the property less the cost to foreclose and sell the property. As of June 30, 2020, the Company believed no additional loss provision was necessary based on the current value of the underlying collateral.

As of June 30, 2020, there were no unfunded commitments associated with modified loans considered TDRs.

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

Loans on Non-Accrual Status

During the three months ended December 31, 2019, one of the Company’s loans, which had a carrying value of $61.5 million, was placed on non-accrual status. The Company performed a review of the loan collateral. The review consisted of conversations with market participants familiar with the property location as well as reviewing market data and comparables. Based on this review, the Company determined that no asset-specific impairment was required for this loan. The Company will continue to monitor for impairment.

During the three months ended June 30, 2020, one of the Company’s loans, which had a carrying value of $8.0 million, was placed on non-accrual status. The Company performed a review of the loan collateral. The review consisted of conversations with market participants familiar with the property location as well as reviewing market data and comparables. Based on this review, the Company determined that no asset-specific impairment was required for this loan. The Company will continue to monitor for impairment.

During the three months ended June 30, 2020, one of the Company’s loans, which had a carrying value of $39.5 million, was placed on non-accrual status. The Company performed a review of the loan collateral. The review consisted of conversations with market participants familiar with the property location as well as reviewing market data and comparables. Based on this review, the Company determined that no asset-specific impairment was required for this loan. The Company will continue to monitor for impairment.

There are no other loans on non-accrual status other than those discussed in Individually Impaired Loans above as of June 30, 2020.

REAL ESTATE SECURITIES

6 Months Ended

Jun. 30, 2020

Investments, Debt and Equity Securities [Abstract]

REAL ESTATE SECURITIES

4. REAL ESTATE SECURITIES

Since the onset of the COVID-19 pandemic, there has been a decrease in liquidity and trading activity for the real estate securities we own. The Company invests in primarily AAA-rated real estate securities, typically front pay securities, with

relatively short duration and significant subordination. The hyperamortization features included in many of the securities positions we own help mitigate potential credit losses even in the current market conditions. During the three months ended June 30, 2020, liquidity and trading activity began to return to the market and the value of our securities portfolio as of June 30, 2020 had an unrealized mark-to-market gain of $11.8 million. During the six months ended June 30, 2020, the market and the value of our securities portfolio were down. As of June 30, 2020 there was an unrealized mark-to-market loss of $63.6 million related to the six months ended June 30, 2020.

CMBS, CMBS interest-only securities, Agency securities, Government National Mortgage Association (“GNMA”) construction securities, GNMA permanent securities and corporate bonds are classified as available-for-sale and reported at fair value with changes in fair value recorded in the current period in other comprehensive income. GNMA and Federal Home Loan Mortgage Corp (“FHLMC”) securities (collectively, “Agency interest-only securities”) are recorded at fair value with changes in fair value recorded in current period earnings. Equity securities are reported at fair value with changes in fair value recorded in current period earnings. The following is a summary of the Company’s securities at June 30, 2020 and December 31, 2019 ($ in thousands):

June 30, 2020


					Gross Unrealized									Weighted Average
Asset Type	Outstanding Face Amount		Amortized Cost Basis/Purchase Price		Gains		Losses		Carrying Value			# of Securities	Rating (1)	Coupon %		Yield %		Remaining Duration (years)

CMBS(2)	$	1,496,090	$	1,495,892	$	212	$	(48,766)	$	1,447,338	(3)	49	AAA	1.51	%	1.57	%	2.27
CMBS interest-only(2)(4)	1,535,739		25,026		488		(4)		25,510		(5)	15	AAA	0.45	%	2.83	%	2.34
GNMA interest-only(4)(6)	93,464		1,335		204		(161)		1,378			14	AA+	0.45	%	4.21	%	3.18
Agency securities(2)	610		619		17		—		636			2	AA+	2.61	%	1.68	%	1.56
GNMA permanent securities(2)	30,853		31,006		864		—		31,870			6	AA+	3.89	%	3.50	%	2.41

Total debt securities	$	3,156,756	$	1,553,878	$	1,785	$	(48,931)	$	1,506,732		86		0.98	%	1.63	%	2.27

Provision for current expected credit losses	N/A		—		—		(19)		(19)
Total real estate securities	$	3,156,756	$	1,553,878	$	1,785	$	(48,950)	$	1,506,713		86

(1)Represents the weighted average of the ratings of all securities in each asset type, expressed as an S&P equivalent rating. For each security rated by multiple rating agencies, the highest rating is used. Ratings provided were determined by third-party rating agencies as of a particular date, may not be current and are subject to change (including the assignment of a “negative outlook” or “credit watch”) at any time.

(2)CMBS, CMBS interest-only securities, Agency securities, GNMA permanent securities and corporate bonds are classified as available-for-sale and reported at fair value with changes in fair value recorded in the current period in other comprehensive income.

(3)Includes $11.1 million of restricted securities which are designated as risk retention securities under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, (the “Dodd-Frank Act”) and are therefore subject to transfer restrictions over the term of the securitization trust and are classified as held-to-maturity and reported at amortized cost.

(4)The amounts presented represent the principal amount of the mortgage loans outstanding in the pool in which the interest-only securities participate.

(5)Includes $0.7 million of restricted securities which are designated as risk retention securities under the Dodd-Frank Act and are therefore subject to transfer restrictions over the term of the securitization trust and are classified as held-to-maturity and reported at amortized cost.

(6)Agency interest-only securities are recorded at fair value with changes in fair value recorded in current period earnings. The Company’s Agency interest-only securities are considered to be hybrid financial instruments that contain embedded derivatives. As a result, the Company has elected to account for them as hybrid instruments in their entirety at fair value with changes in fair value recognized in unrealized gain (loss) on Agency interest-only securities in the consolidated statements of income in accordance with ASC 815.

(7)The Company has elected to account for equity securities at fair value with changes in fair value recorded in current period earnings.

December 31, 2019


					Gross Unrealized									Weighted Average
Asset Type	Outstanding Face Amount		Amortized Cost Basis		Gains		Losses		Carrying Value			# of Securities	Rating (1)	Coupon %		Yield %		Remaining Duration (years)

CMBS(2)	$	1,640,597	$	1,640,905	$	4,337	$	(920)	$	1,644,322	(3)	125	AAA	3.06	%	3.08	%	2.41
CMBS interest-only(2)(4)	1,559,160		28,553		630		(37)		29,146		(5)	15	AAA	0.60	%	3.04	%	2.53
GNMA interest-only(4)(6)	109,783		1,982		123		(254)		1,851			11	AA+	0.49	%	4.59	%	2.77
Agency securities(2)	629		640		1		(4)		637			2	AA+	2.65	%	1.73	%	1.83
GNMA permanent securities(2)	31,461		31,681		688		—		32,369			6	AA+	3.91	%	3.17	%	1.93

Total debt securities	$	3,341,630	$	1,703,761	$	5,779	$	(1,215)	$	1,708,325		159		1.84	%	3.06	%	2.39
Equity securities(7)	N/A		12,848		292		(160)		12,980			2	N/A	N/A		N/A		N/A
Total real estate securities	$	3,341,630	$	1,716,609	$	6,071	$	(1,375)	$	1,721,305		161

(1)Represents the weighted average of the ratings of all securities in each asset type, expressed as an S&P equivalent rating. For each security rated by multiple rating agencies, the highest rating is used. Ratings provided were determined by third-party rating agencies as of a particular date, may not be current and are subject to change (including the assignment of a “negative outlook” or “credit watch”) at any time.

(2)CMBS, CMBS interest-only securities, Agency securities, GNMA permanent securities and corporate bonds are classified as available-for-sale and reported at fair value with changes in fair value recorded in the current period in other comprehensive income.

(3)Includes $11.6 million of restricted securities which are designated as risk retention securities under the Dodd-Frank Act and are therefore subject to transfer restrictions over the term of the securitization trust and are classified as held-to-maturity and reported at amortized cost.

(4)The amounts presented represent the principal amount of the mortgage loans outstanding in the pool in which the interest-only securities participate.

(5)Includes $0.8 million of restricted securities which are designated as risk retention securities under the Dodd-Frank Act and are therefore subject to transfer restrictions over the term of the securitization trust and are classified as held-to-maturity and reported at amortized cost.

(6)Agency interest-only securities are recorded at fair value with changes in fair value recorded in current period earnings. The Company’s Agency interest-only securities are considered to be hybrid financial instruments that contain embedded derivatives. As a result, the Company accounts for them as hybrid instruments in their entirety at fair value with changes in fair value recognized in unrealized gain (loss) on Agency interest-only securities in the consolidated statements of income in accordance with ASC 815.

(7)The Company has elected to account for equity securities at fair value with changes in fair value recorded in current period earnings.

The following is a breakdown of the carrying value of the Company’s debt securities by remaining maturity based upon expected cash flows at June 30, 2020 and December 31, 2019 ($ in thousands):

June 30, 2020


Asset Type	Within 1 year		1-5 years		5-10 years		After 10 years		Total

CMBS	$	185,672	$	1,212,532	$	49,134	$	—	$	1,447,338
CMBS interest-only	920		24,590		—		—		25,510
GNMA interest-only	70		1,028		276		4		1,378
Agency securities	—		636		—		—		636
GNMA permanent securities	231		31,639		—		—		31,870


Total debt securities	$	186,893	$	1,270,425	$	49,410	$	4	$	1,506,732

December 31, 2019


Asset Type	Within 1 year		1-5 years		5-10 years		After 10 years		Total

CMBS	$	177,193	$	1,389,392	$	77,737	$	—	$	1,644,322
CMBS interest-only	1,439		27,707		—		—		29,146
GNMA interest-only	91		1,504		256		—		1,851
Agency securities	—		637		—		—		637
GNMA permanent securities	416		31,953		—		—		32,369

Total debt securities	$	179,139	$	1,451,193	$	77,993	$	—	$	1,708,325

During the three and six months ended June 30, 2020, the Company realized a gain (loss) on the sale of equity securities of $(0.2) million and $1.1 million, respectively, which is included in realized gain (loss) on securities on the Company’s consolidated statements of income. During the three and six months ended June 30, 2019, the Company realized a gain (loss) on the sale of equity securities of zero and $0.1 million, respectively, which is included in realized gain (loss) on securities on the Company’s consolidated statements of income.

During the three and six months ended June 30, 2020, the Company realized losses on securities recorded as other than temporary impairments of $0.1 million and $0.3 million, respectively, which are included in realized gain (loss) on securities on the Company’s consolidated statements of income. During the three and six months ended June 30, 2019 the Company realized no losses on securities recorded as other than temporary impairments.

REAL ESTATE AND RELATED LEASE INTANGIBLES, NET

6 Months Ended

Jun. 30, 2020

Real Estate [Abstract]

REAL ESTATE AND RELATED LEASE INTANGIBLES, NET

5. REAL ESTATE AND RELATED LEASE INTANGIBLES, NET

The recent market volatility due to the COVID-19 pandemic has brought illiquidity in most asset classes, including real estate. The Company expects the net leased commercial real estate properties, which comprise the majority of our portfolio, to be minimally impacted as the majority of the net leased properties in our real estate portfolio are necessity-based businesses and have remained open and stable during the COVID-19 pandemic. We continue to actively monitor the diversified commercial real estate properties for both the immediate and long term impact of the pandemic on the buildings, the tenants, the business plans and the ability to execute those business plans.

The following tables present additional detail related to our real estate portfolio, net, including foreclosed properties ($ in thousands):


	June 30, 2020		December 31, 2019

Land	$	228,111	$	209,955
Building	871,585		883,005
In-place leases and other intangibles	159,049		161,203
Less: Accumulated depreciation and amortization	(216,535)		(206,082)

Real estate and related lease intangibles, net	$	1,042,210	$	1,048,081

Below market lease intangibles, net (other liabilities)	$	(38,125)	$	(39,067)

At June 30, 2020 and December 31, 2019, the Company held foreclosed properties included in real estate and related lease intangibles, net with a carrying value of $112.7 million and $89.5 million, respectively.

The following table presents depreciation and amortization expense on real estate recorded by the Company ($ in thousands):


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019

Depreciation expense(1)	$	8,110	$	7,697	$	16,383	$	15,382
Amortization expense	1,681		2,213		3,392		4,730
Total real estate depreciation and amortization expense	$	9,791	$	9,910	$	19,775	$	20,112

(1)Depreciation expense on the consolidated statements of income also includes $25 thousand and $50 thousand of depreciation on corporate fixed assets for the three and six months ended June 30, 2020, respectively. Depreciation expense on the consolidated statements of income also includes $25 thousand and $50 thousand for the three and six months ended June 30, 2019, respectively.

The Company’s intangible assets are comprised of in-place leases, above market leases and other intangibles. The following tables present additional detail related to our intangible assets ($ in thousands):


	June 30, 2020		December 31, 2019

Gross intangible assets(1)	$	159,049	$	161,203
Accumulated amortization	63,089		62,773
Net intangible assets	$	95,960	$	98,430

(1)Includes $4.4 million and $4.5 million of unamortized above market lease intangibles which are included in real estate and related lease intangibles, net on the consolidated balance sheets as of June 30, 2020 and December 31, 2019, respectively.

The following table presents increases/reductions in operating lease income recorded by the Company ($ in thousands):


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019

Reduction in operating lease income for amortization of above market lease intangibles acquired	$	(92)	$	(208)	$	(183)	$	(633)
Increase in operating lease income for amortization of below market lease intangibles acquired	619		461		1,371		1,030

The following table presents expected adjustment to operating lease income and expected amortization expense during the next five years and thereafter related to the above and below market leases and acquired in-place lease and other intangibles for property owned as of June 30, 2020 ($ in thousands):


Period Ending December 31,	Adjustment to Operating Lease Income		Amortization Expense

2020 (last 6 months)	$	625	$	2,956
2021	1,070		5,504
2022	1,070		5,504
2023	1,070		5,504
2024	1,070		5,504
Thereafter	28,867		66,590
Total	$	33,772	$	91,562

Lease Prepayment by Lessor, Retirement of Related Mortgage Loan Financing and Impairment of Real Estate

On January 10, 2019, the Company received $10.0 million prepayment of a lease on a single-tenant two-story office building in Wayne, NJ. As of March 31, 2019, this property had a book value of $5.6 million, which is net of accumulated depreciation and amortization of $2.7 million. The Company recognized the $10.0 million of operating lease income on a straight-line basis over the revised lease term. On February 6, 2019, the Company paid off $6.6 million of mortgage loan financing related to the property, recognizing a loss on extinguishment of debt of $1.1 million. During the three months ended March 31, 2019, the Company recorded a $1.4 million impairment of real estate to reduce the carrying value of the real estate to the estimated fair value of the real estate. On May 1, 2019, the Company completed the sale of the property recognizing $3.9 million of operating lease income, $3.5 million realized loss on sale of real estate, net and $0.4 million of depreciation and amortization expense, resulting in a net loss of $20 thousand. See Note 15, Fair Value of Financial Instruments for further detail.

There were $0.7 million and $0.9 million of rent receivables included in other assets on the consolidated balance sheets as of June 30, 2020 and December 31, 2019, respectively.

There was unencumbered real estate of $82.4 million and $59.2 million as of June 30, 2020 and December 31, 2019, respectively.

During the three and six months ended June 30, 2020, the Company recorded $0.6 million and $2.5 million, respectively, of real estate operating income, which is included in operating lease income in the consolidated statements of income. During the three and six months ended 2019, the Company recorded $0.8 million and $1.0 million, respectively, of real estate operating income, which is included in operating lease income in the consolidated statements of income.

The following is a schedule of non-cancellable, contractual, future minimum rent under leases (excluding property operating expenses paid directly by tenant under net leases) at June 30, 2020 ($ in thousands):


Period Ending December 31,	Amount

2020 (last 6 months)	$	43,163
2021	73,091
2022	66,145
2023	65,377
2024	64,412
Thereafter	507,659
Total	$	819,847

Acquisitions

During the six months ended June 30, 2020, the Company acquired the following properties ($ in thousands):

Acquisition Date

Type

Primary Location(s)

Purchase Price/Fair Value on the Date of Foreclosure

Ownership Interest (1)

Purchases of real estate

Aggregate purchases of net leased real estate

$

6,239

100.0%

Real estate acquired via foreclosure

March 2020

Diversified

Los Angeles, CA

21,535

100.0%

June 2020

Diversified

Winston Salem, NC

3,900

100.0%

Total real estate acquired via foreclosure

25,435

Total real estate acquisitions

$

31,674

(1)Properties were consolidated as of acquisition date.

The Company allocates purchase consideration based on relative fair values, and real estate acquisition costs are capitalized as a component of the cost of the assets acquired for asset acquisitions. During the six months ended June 30, 2020, all acquisitions were determined to be asset acquisitions.

The purchase prices were allocated to the asset acquisitions during the six months ended June 30, 2020, as follows ($ in thousands):


	Purchase Price Allocation

Land	$	23,524
Building	7,244
Intangibles	1,201
Below Market Lease Intangibles	(295)
Total purchase price	$	31,674

The weighted average amortization period for intangible assets acquired during the six months ended June 30, 2020 was 39.8 years. The Company recorded $0.1 million and $0.2 million in revenues from its 2020 acquisitions for the three and six months ended June 30, 2020, respectively, which is included in its consolidated statements of income. The Company recorded $0.1 million and $47.6 thousand in earnings (losses) from its 2020 acquisitions for the three and six months ended June 30, 2020, respectively, which is included in its consolidated statements of income.

During the six months ended June 30, 2019, the Company acquired the following properties ($ in thousands):

Acquisition Date

Type

Primary Location(s)

Purchase Price/Fair Value on the Date of Foreclosure

Ownership Interest (1)

Purchases of real estate

Aggregate purchases of net leased real estate

$

5,071

100.0%

Real estate acquired via foreclosure

February 2019

Diversified

Omaha, NE

18,200

100.0%

Total real estate acquired via foreclosure

18,200

Total real estate acquisitions

$

23,271

(1)Properties were consolidated as of acquisition date.

The purchase prices were allocated to the asset acquisitions during the six months ended June 30, 2019, as follows ($ in thousands):


	Purchase Price Allocation

Land	$	3,789
Building	18,885
Intangibles	854
Below Market Lease Intangibles	(257)
Total purchase price	$	23,271

The weighted average amortization period for intangible assets acquired during the six months ended June 30, 2019 was 37.0 years. The Company recorded $62.5 thousand and $78.9 thousand in revenues from its 2019 acquisitions for the three and six months ended June 30, 2019, respectively, which is included in its consolidated statements of income. The Company recorded $(1.2) million and $(1.5) million in earnings (losses) from its 2019 acquisitions for the three and six months ended June 30, 2019, respectively, which is included in its consolidated statements of income.

Acquisitions via Foreclosure

In June 2020, the Company acquired a hotel in Winston Salem, NC via foreclosure. This property previously served as collateral for a mortgage loan receivable held for investment with a net basis of $3.8 million. The Company obtained a third-party appraisal of the property. The $3.9 million fair value was determined using the ground lease approach and the income approach to value. The appraiser utilized a terminal capitalization rate of 9.50% and a discount rate of 13.50%. There was no gain or loss resulting from the foreclosure of the loan.

In March 2020, the Company acquired a development property in Los Angeles, CA, via foreclosure. This property previously served as collateral for a mortgage loan receivable held for investment with a basis of $21.6 million, net of an asset-specific loan loss provision of $2.0 million. The Company obtained a third-party appraisal of the property. Substantially all of the fair value was attributed to land. The $21.5 million fair value was determined using the sales comparison approach to value. Using this approach, the appraiser developed an opinion of the fee simple value of the underlying land by comparing the property to similar, recently sold properties in the surrounding or competing area. The Company recorded a $0.1 million loss resulting from the foreclosure of the loan.

In February 2019, the Company acquired a hotel in Omaha, NE, via foreclosure. This property previously served as collateral for a mortgage loan receivable held for investment with a net basis of $17.9 million. The Company obtained a third-party appraisal of the property. The $18.2 million fair value was determined using the income approach to value. The appraiser utilized a terminal capitalization rate of 8.75% and a discount rate of 10.25%. There was no gain or loss resulting from the foreclosure of the loan.

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

Sales

The Company sold the following properties during the six months ended June 30, 2020 ($ in thousands):


Sales Date	Type	Primary Location(s)	Net Sales Proceeds		Net Book Value		Realized Gain/(Loss)		Properties	Units Sold	Units Remaining

Various	Condominium	Miami, FL	$	931	$	924	$	7	—	3	3
March 2020	Diversified	Richmond, VA	22,526		14,829		7,697		7	—	—
March 2020	Diversified	Richmond, VA	6,933		4,109		2,824		1	—	—



Totals			$	30,390	$	19,862	$	10,528

Realized gain on the sale of real estate, net on the consolidated statements of income also includes $0.1 million of realized loss on the disposal of fixed assets for the six months ended June 30, 2020

The Company sold the following properties during the six months ended June 30, 2019 ($ in thousands):


Sales Date	Type	Primary Location(s)	Net Sales Proceeds		Net Book Value		Realized Gain/(Loss)		Properties	Units Sold	Units Remaining

N/A	Condominium	Las Vegas, NV	$	—	$	—	$	—	—	—	1
Various	Condominium	Miami, FL	3,917		3,550		367		—	13	9
April 2019	Diversified	Wayne, NJ	1,729		4,799		(3,070)		1	—	—
May 2019	Diversified	Grand Rapids, MI	10,019		8,254		1,765		1	—	—


Totals			$	15,665	$	16,603	$	(938)

INVESTMENT IN AND ADVANCES TO UNCONSOLIDATED JOINT VENTURES

6 Months Ended

Jun. 30, 2020

Equity Method Investments and Joint Ventures [Abstract]

INVESTMENT IN AND ADVANCES TO UNCONSOLIDATED JOINT VENTURES

6. INVESTMENT IN AND ADVANCES TO UNCONSOLIDATED JOINT VENTURES

The following is a summary of the Company’s investments in and advances to unconsolidated joint ventures, which we account for using the equity method, as of June 30, 2020 and December 31, 2019 ($ in thousands):


Entity	June 30, 2020		December 31, 2019


Grace Lake JV, LLC	$	3,496	$	3,047
24 Second Avenue Holdings LLC	45,423		45,386
Investment in unconsolidated joint ventures	$	48,919	$	48,433

The following is a summary of the Company’s allocated earnings (losses) based on its ownership interests from investment in unconsolidated joint ventures for the three and six months ended June 30, 2020 and 2019 ($ in thousands):


	Three Months Ended June 30,						Six Months Ended June 30,
Entity	2020		2019		2020		2019


Grace Lake JV, LLC	$	263	$	618	$	449	$	1,032
24 Second Avenue Holdings LLC	208		946		463		1,490
Earnings (loss) from investment in unconsolidated joint ventures	$	471	$	1,564	$	912	$	2,522

Grace Lake JV, LLC

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

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

During the six months ended June 30, 2020, the Company received no distributions from its investment in Grace Lake LLC. During the six months ended June 30, 2019, the Company had received $3.1 million of distributions from its investment in Grace Lake LLC.

The Company holds its investment in Grace Lake LLC in a TRS.

24 Second Avenue Holdings LLC

On August 7, 2015, the Company entered into a joint venture, 24 Second Avenue Holdings LLC (“24 Second Avenue”), with an operating partner (the “Operating Partner”) to invest in a ground-up residential/retail condominium development and construction project located at 24 Second Avenue, New York, NY. The Company accounted for its interest in 24 Second Avenue using the equity method of accounting as its joint venture partner was the managing member of 24 Second Avenue and had substantive management rights.

During the three months ended March 31, 2019, the Company converted its existing $35.0 million common equity interest into a $35.0 million priority preferred equity position. The Company also provided $50.4 million in first mortgage financing in order to refinance the existing $48.1 million first mortgage construction loan which was made by another lending institution. In addition to the new $50.4 million first mortgage loan, the Company also funded a $6.5 million mezzanine loan for use in completing the project. The Operating Partner must fully fund any and all additional capital for necessary expenses.

Due to the Company’s non-controlling equity interest in 24 Second Avenue, the Company accounts for the new loans as additional investments in the joint venture.

During the three and six months ended June 30, 2020, the Company recorded $0.2 million and $0.5 million, respectively, in income (expenses), each of which is recorded in earnings (loss) from investment in unconsolidated joint ventures in the consolidated statements of income. During the three and six months ended June 30, 2019, the Company recorded $0.9 million and $1.5 million, respectively, in income (expenses), each of which is recorded in earnings (loss) from investment in unconsolidated joint ventures in the consolidated statements of income. During 2019, the Company capitalized interest related to the cost of its investment in 24 Second Avenue, as 24 Second Avenue had activities in progress necessary to construct and ultimately sell condominium units. During the six months ended June 30, 2019, the Company capitalized $0.1 million of interest expense, using a weighted average interest rate. The capitalized interest expense was recorded in investment in unconsolidated joint ventures in the consolidated balance sheets. As a result of the transactions described above, subsequent to the three months ended March 31, 2019, the Company no longer capitalizes interest related to this investment, and income generated from the new loans is accounted for as earnings from investment in unconsolidated joint ventures.

As of June 30, 2020, 24 Second Avenue had $11.3 million of loans payable to a third-party lender. 24 Second Avenue consists of 30 residential condominium units and one commercial condominium unit. 24 Second Avenue started closing on the existing sales contracts during the quarter ended March 31, 2019, upon receipt of New York City Building Department approvals and a temporary certificate of occupancy for a portion of the project. As of June 30, 2020, 24 Second Avenue sold 19 residential condominium units for $49.6 million in total gross sale proceeds. As of June 30, 2020, the Company had no additional remaining capital commitment to 24 Second Avenue.

The Company’s investment in 24 Second Avenue is an unconsolidated joint venture, which is a VIE for which the Company is not the primary beneficiary. This joint venture was deemed to be a VIE primarily based on (i) the fact that the total equity investment at risk (inclusive of the additional financing the Company provided through the first mortgage and mezzanine loans) is sufficient to permit the entities to finance activities without additional subordinated financial support provided by any parties, including equity holders; and (ii) the voting and economic rights are not disproportionate within the joint venture. The Company determined that it was not the primary beneficiary of this VIE because it does not have a controlling financial interest.

The Company holds its investment in 24 Second Avenue in a TRS.

Combined Summary Financial Information for Unconsolidated Joint Ventures

The following is a summary of the combined financial position of the unconsolidated joint ventures in which the Company had investment interests as of June 30, 2020 and December 31, 2019 ($ in thousands):


	June 30, 2020		December 31, 2019

Total assets	$	113,414	$	118,727
Total liabilities	77,277		78,762
Partners’/members’ capital	$	36,137	$	39,965

The following is a summary of the combined results from operations of the unconsolidated joint ventures for the period in which the Company had investment interests during the three and six months ended June 30, 2020 and 2019 ($ in thousands):


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019

Total revenues	$	4,294	$	6,330	$	8,770	$	11,030
Total expenses	3,450		3,571		7,424		7,434
Net income (loss)	$	844	$	2,759	$	1,346	$	3,596

DEBT OBLIGATIONS, NET

6 Months Ended

Jun. 30, 2020

Debt Disclosure [Abstract]

DEBT OBLIGATIONS, NET

7. DEBT OBLIGATIONS, NET

The details of the Company’s debt obligations at June 30, 2020 and December 31, 2019 are as follows ($ in thousands):

June 30, 2020


Debt Obligations	Committed Financing		Debt Obligations Outstanding			Committed but Unfunded		Interest Rate at June 30, 2020(1)				Current Term Maturity	Remaining Extension Options	Eligible Collateral		Carrying Amount of Collateral			Fair Value of Collateral

Committed Loan Repurchase Facility(2)	$	500,000	$	114,679		$	385,321	1.93%	—	2.18%	12/19/2022	(3)	(4)	$	179,332	$	179,332
Committed Loan Repurchase Facility	250,000		—			250,000		—%	—	—%	2/26/2021	(5)	(6)	—		—
Committed Loan Repurchase Facility	300,000		144,565			155,435		1.94%	—	2.94%	12/19/2020	(7)	(8)	251,788		251,788
Committed Loan Repurchase Facility	300,000		65,702			234,298		1.94%	—	2.19%	11/6/2022	(9)	(4)	100,597		100,704
Committed Loan Repurchase Facility	100,000		38,228			61,772		2.31%	—	2.43%	12/31/2022	(10)	(4)	64,721		64,807
Committed Loan Repurchase Facility	100,000		17,901			82,099		2.68%	—	2.68%	3/24/2021	(11)	(12)	30,600		30,600
Total Committed Loan Repurchase Facilities	1,550,000		381,075			1,168,925								627,038		627,231
Committed Securities Repurchase Facility(2)	785,321		451,342			333,979		0.89%	—	2.44%	12/23/2021	N/A	(13)	576,924		576,924
Uncommitted Securities Repurchase Facility	N/A (13)		462,612			N/A (14)		1.42%	—	4.81%	7/2020 - 9/2020	N/A	(13)	596,230		596,230		(15)
Total Repurchase Facilities	1,950,000		1,295,029			1,502,904								1,800,192		1,800,385
Revolving Credit Facility	266,430		266,430			—		3%	—	3%	2/11/2021	(16)	N/A (17)	N/A (17)		N/A (17)
Mortgage Loan Financing	805,431		805,431			—		3.75%	—	6.75%	2020 - 2030(18)	N/A	(19)	959,766		1,172,268		(20)
Secured Financing Facility	206,350		188,687		(21)	—		10.75%	—	10.75%	5/6/2023	N/A	(22)	335,237		335,675
CLO Debt	304,413		299,605		(23)	—		5.50%	—	5.50%	5/16/2024	N/A	(24)	469,505		469,587

Borrowings from the FHLB	1,500,000		360,790			1,139,210		0.44%	—	2.95%	2020 - 2024	N/A	(24)	526,151		528,650		(25)
Senior Unsecured Notes	1,752,817		1,737,542		(26)	—		4.25%	—	5.88%	2021 - 2027	N/A	N/A (27)	N/A (27)		N/A (27)


Total Debt Obligations, Net	$	6,785,441	$	4,953,514		$	2,642,114							$	4,090,851	$	4,306,565

(1)June 2020 LIBOR rates are used to calculate interest rates for floating rate debt.

(2)The combined committed amounts for the loan repurchase facility and the securities repurchase facility total $900.0 million, with maximum capacity on the loan repurchase facility of $500.0 million, and maximum capacity on the securities repurchase facility of $900.0 million less outstanding commitments on the loan repurchase facility.

(3)Two additional 12-month periods at Company’s option. No new advances are permitted after the initial maturity date.

(4)First mortgage commercial real estate loans and senior and pari passu interests therein. It does not include the real estate collateralizing such loans.

(5)Three additional 12-month periods at Company’s option.

(6)First mortgage commercial real estate loans. It does not include the real estate collateralizing such loans.

(7)Three additional 364-day periods.

(8)First mortgage and mezzanine commercial real estate loans and senior and pari passu interests therein. It does not include the real estate collateralizing such loans.

(9)One additional 12-month extension period and two additional 6-month extension periods at Company’s option.

(10)Two additional 12-month extension periods at Company’s option. No new advances are permitted after the initial maturity date.

(11)The Company may extend periodically with lender’s consent. At no time can the maturity of the facility exceed 364 days from the date of determination.

(12)First mortgage, junior and mezzanine commercial real estate loans, and certain senior and/or pari passu interests therein.

(13)Commercial real estate securities. It does not include the real estate collateralizing such securities.

(14)Represents uncommitted securities repurchase facilities for which there is no committed amount subject to future advances.

(15)Includes $2.2 million of restricted securities under the risk retention rules of the Dodd-Frank Act. These securities are accounted for as held-to-maturity and recorded at amortized cost basis.

(16)Four additional 12-month periods at Company’s option.

(17)The obligations under the Revolving Credit Facility are guaranteed by the Company and certain of its subsidiaries and secured by equity pledges in certain Company subsidiaries.

(18)Anticipated repayment dates.

(19)Certain of our real estate investments serve as collateral for our mortgage loan financing.

(20)Using undepreciated carrying value of commercial real estate to approximate fair value.

(21)Presented net of unamortized debt issuance costs of $9.7 million and an unamortized discount of $8.0 million related to the Purchase Right (described in detail under Secured Financing Facility below) at June 30, 2020.

(22)First mortgage commercial real estate loans. Substitution of collateral and conversion of loan collateral to mortgage collateral are permitted with Lender’s approval.

(23)Presented net of unamortized debt issuance costs of $4.8 million at June 30, 2020.

(24)First mortgage commercial real estate loans and investment grade commercial real estate securities. It does not include the real estate collateralizing such loans and securities.

(25)Includes $9.4 million of restricted securities under the risk retention rules of the Dodd-Frank Act. These securities are accounted for as held-to-maturity and recorded at amortized cost basis.

(26)Presented net of unamortized debt issuance costs of $15.3 million at June 30, 2020.

(27)The obligations under the senior unsecured notes are guaranteed by the Company and certain of its subsidiaries.

December 31, 2019


Debt Obligations	Committed Financing		Debt Obligations Outstanding			Committed but Unfunded		Interest Rate at December 31, 2019(1)				Current Term Maturity	Remaining Extension Options	Eligible Collateral		Carrying Amount of Collateral			Fair Value of Collateral

Committed Loan Repurchase Facility	$	600,000	$	183,828		$	416,172	3.24%	—	3.74%	12/19/2022	(2)	(3)	$	287,974	$	288,210
Committed Loan Repurchase Facility	350,000		70,697			279,303		3.71%	—	3.81%	5/24/2020	(4)	(5)	101,590		103,868
Committed Loan Repurchase Facility	300,000		248,182			51,818		3.49%	—	3.74%	12/19/2020	(6)	(7)	382,778		382,778
Committed Loan Repurchase Facility	300,000		98,678			201,322		3.50%	—	3.75%	11/6/2022	(8)	(3)	175,000		175,270
Committed Loan Repurchase Facility	100,000		9,952			90,048		3.96%	—	3.99%	1/3/2023	(9)	(3)	75,628		75,813
Committed Loan Repurchase Facility	100,000		90,927			9,073		3.74%	—	3.80%	12/24/2020	(10)	(11)	126,311		126,311
Total Committed Loan Repurchase Facilities	1,750,000		702,264			1,047,736								1,149,281		1,152,250
Committed Securities Repurchase Facility	400,000		42,751			357,249		2.50%	—	2.56%	12/23/2021	N/A	(12)	52,691		52,691
Uncommitted Securities Repurchase Facility	N/A (12)		1,070,919			N/A (13)		2.17%	—	3.54%	1/2020 - 3/2020	N/A	(12)	1,188,440		1,188,440		(14)
Total Repurchase Facilities	2,150,000		1,815,934			1,404,985								2,390,412		2,393,381
Revolving Credit Facility	266,430		—			266,430		NA			2/11/2020	(15)	N/A (16)	N/A (16)		N/A (16)
Mortgage Loan Financing	812,606		812,606			—		3.75%	—	6.75%	2020 - 2029(17)	N/A	(18)	988,857		1,192,106		(19)


Borrowings from the FHLB	1,945,795		1,073,500			872,295		1.47%	—	2.95%	2020 - 2024	N/A	(20)	1,107,188		1,113,811		(21)
Senior Unsecured Notes	1,166,201		1,157,833		(22)	—		5.25%	—	5.88%	2021 - 2025	N/A	N/A (23)	N/A (23)		N/A (23)


Total Debt Obligations	$	6,341,032	$	4,859,873		$	2,543,710							$	4,486,457	$	4,699,298

(1)December 31, 2019 LIBOR rates are used to calculate interest rates for floating rate debt.

(2)Two additional 12-month periods at Company’s option. No new advances are permitted after the initial maturity date.

(3)First mortgage commercial real estate loans and senior and pari passu interests therein. It does not include the real estate collateralizing such loans.

(4)One additional 12-month period at Company’s option.

(5)First mortgage commercial real estate loans. It does not include the real estate collateralizing such loans.

(6)Three additional 364-day periods.

(7)First mortgage and mezzanine commercial real estate loans and senior pari passu interests therein. It does not include the real estate collateralizing such loans.

(8)One additional 12-month extension period and two additional 6-month extension periods at Company’s option.

(9)Two additional 12-month extension periods at Company’s option. No new advances are permitted after the initial maturity date.

(10)The Company may extend periodically with lender’s consent. At no time can the maturity of the facility exceed 364 days from the date of determination.

(11)First mortgage, junior and mezzanine commercial real estate loans, and certain senior and/or pari passu interests therein.

(12)Commercial real estate securities. It does not include the real estate collateralizing such securities.

(13)Represents uncommitted securities repurchase facilities for which there is no committed amount subject to future advances.

(14)Includes $2.2 million of restricted securities under the risk retention rules of the Dodd-Frank Act. These securities are accounted for as held-to-maturity and recorded at amortized cost basis.

(15)Four additional 12-month periods at Company’s option.

(16)The obligations under the Revolving Credit Facility are guaranteed by the Company and certain of its subsidiaries and secured by equity pledges in certain Company subsidiaries.

(17)Anticipated repayment dates.

(18)Certain of our real estate investments serve as collateral for our mortgage loan financing.

(19)Using undepreciated carrying value of commercial real estate to approximate fair value.

(20)First mortgage commercial real estate loans and pari passu interests therein. It does not include the real estate collateralizing such loans.

(21)First mortgage commercial real estate loans and investment grade commercial real estate securities. It does not include the real estate collateralizing such loans and securities.

(22)Includes $9.9 million of restricted securities under the risk retention rules of the Dodd-Frank Act. These securities are accounted for as held-to-maturity and recorded at amortized cost basis.

(23)Presented net of unamortized debt issuance costs of $8.4 million at December 31, 2019.

(24)The obligations under the senior unsecured notes are guaranteed by the Company and certain of its subsidiaries.

Combined Maturity of Debt Obligations

The following schedule reflects the Company’s contractual payments under all borrowings by maturity ($ in thousands):


Period ending December 31,	Borrowings by Maturity(1)

2020 (last 6 months)	$	1,494,949
2021	527,569
2022	642,014
2023	351,436
2024	612,695
Thereafter	1,358,119
Subtotal	4,986,782
Debt issuance costs included in senior unsecured notes	(15,275)

Debt issuance costs included in secured financing facility	(9,705)
Discount on secured financing facility related to purchase right	(7,958)
Debt issuance costs included in CLO debt	(4,808)
Debt issuance costs included in mortgage loan financing	(524)
Premiums included in mortgage loan financing(2)	5,002
Total	$	4,953,514

(1)Contractual payments under current maturities, some of which are subject to extensions. The maturities listed above for 2020 (last 6 months) relate to debt obligations that are subject to existing Company controlled extension options for one or more additional one year periods or could be refinanced by other existing facilities as of June 30, 2020.

(2)Deferred gains on intercompany loans, secured by our own real estate, sold into securitizations. These premiums are amortized as a reduction to interest expense.

The Company’s debt facilities are subject to covenants which require the Company to maintain a minimum level of total equity. Largely as a result of this restriction, approximately $849.0 million of the total equity is restricted from payment as a dividend by the Company at June 30, 2020.

Committed Loan and Securities Repurchase Facilities

On February 14, 2020, the Company amended one of its committed loan repurchase facilities with a major U.S. bank to reduce the maximum capacity of the facility from $600.0 million to $500.0 million.

On February 26, 2020, the Company amended one of its committed loan repurchase facilities with a major U.S. bank, extending the term of the facility. The current maturity date is now February 26, 2021, and the Company has three one-year extension options for a final maturity date of February 26, 2024. The Company also reduced the maximum size of the facility from $350.0 million to $250.0 million.

On March 23, 2020, the Company amended one of its committed loan and securities repurchase facilities with a major U.S. bank to allow for an increase in the capacity on the securities repurchase facility, to the extent the Company has excess capacity on the loan repurchase facility. Prior to the amendment, the committed amounts on the facility were $500.0 million and $400.0 million on the loan and securities repurchase facilities, respectively. After the amendment, the committed amounts continue to total $900.0 million, with maximum capacity on the loan repurchase facility of $500.0 million, and maximum capacity on the securities repurchase facility of $900.0 million less outstanding commitments on the loan repurchase facility.

Effective June 16, 2020, the Company amended the pricing side letter related to one of its committed loan repurchase facility with a major U.S. bank to extend the current maturity date to March 24, 2021. The Company also temporarily increased the leverage covenant to 4.0x through and including December 31, 2020.

Secured Financing Facility

On April 30, 2020, the Company entered into a strategic financing arrangement (the “Agreement”) with an American multinational corporation (the “Lender”), under which the Lender will provide the Company with approximately $206.4 million in senior secured financing (the “Secured Financing Facility”) to fund transitional and land loans. The Secured Financing Facility will be secured on a first lien basis on a portfolio of certain of the Company’s loans and will mature on May 6, 2023, and borrowings thereunder will bear interest at LIBOR (or a minimum of 0.75% if greater) plus 10.0%, with a minimum interest premium of approximately $39.2 million minus the aggregate sum of all interest payments made under the Secured Financing Facility prior to the date of payment of the minimum interest premium, which is payable upon the earlier of maturity or repayment in full of the loan. The Senior Financing Facility is non-recourse, subject to limited exceptions, and does not contain mark-to-market provisions. Additionally, the Senior Financing Facility provides the Company optionality to modify or restructure loans or forbear in exercising remedies, which maximizes the Company’s financial flexibility.

As part of the strategic financing, the Lender also has the ability to make an equity investment in the Company of up to 4.0 million Class A common shares at $8.00, which amount and price may be proportionally adjusted in the event of equity distributions, stock splits, reclassifications and other similar events (the “Purchase Right”). The Purchase Right will expire on December 31, 2020. The Company expects that any such investment would additionally benefit its liquidity position.

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

Pursuant to the Purchase Right, the Lender has agreed to a customary standstill until December 31, 2020 or the date on which the Lender has exercised the Purchase Right in full, if earlier. In addition, the Lender has agreed not to sell, transfer, assign, pledge, hypothecate, mortgage, dispose of or in any way encumber the shares acquired as a result of exercising the Purchase Right for a period of time following the exercise date. In connection with the issuance of the Purchase Right, the Company and the Lender entered into a registration rights agreement, pursuant to which the Company has agreed to provide customary demand and piggyback registration rights to the Lender.

As of June 30, 2020, the Company had $188.7 million of borrowings outstanding under the secured financing facility included in debt obligations on its consolidated balance sheets, net of unamortized debt issuance costs of $9.7 million and an $8.0 million unamortized discount related to the Purchase Right.

Collateralized Loan Obligation (“CLO”) Debt

On April 27, 2020, a consolidated subsidiary of the Company completed a private CLO transaction with a major U.S. bank which generated $310.2 million of gross proceeds to Ladder, financing $481.3 million of loans (“Contributed Loans”) at a 64.5% advance rate on a matched term, non-mark-to-market and non-recourse basis. A consolidated subsidiary of the Company retained a 35.5% subordinate and controlling interest in the CLO. The Company retained control over major decisions made with respect to the administration of the Contributed Loans, including broad discretion in managing these loans in light of the COVID-19 pandemic, and has the ability to appoint the special servicer under the CLO. The Company retained control over major decisions made with respect to the administration of the Contributed Loans and has the ability to appoint the special servicer under the CLO. The CLO is a VIE and the Company was the primary beneficiary and, therefore, consolidated the VIE - See Note 10, Consolidated Variable Interest Entities. Proceeds from the transaction were used to pay off other secured debt including bank and FHLB financing that was subject to mark-to-market provisions.

As of June 30, 2020, the Company had $299.6 million of matched term, non-mark-to-market and non-recourse basis CLO debt included in debt obligations on its consolidated balance sheets. Unamortized debt issuance costs of $4.8 million were included in CLO debt as of June 30, 2020.

Senior Unsecured Notes

As of June 30, 2020, the Company had $1.7 billion of unsecured corporate bonds outstanding. These unsecured financings were comprised of $258.5 million in aggregate principal amount of 5.875% senior notes due 2021 (the “2021 Notes”), $485.6 million in aggregate principal amount of 5.25% senior notes due 2022 (the “2022 Notes”), $350.8 million in aggregate principal amount of 5.25% senior notes due 2025 (the “2025 Notes”) and $658.0 million in aggregate principal amount of 4.25% senior notes due 2027 (the “2027 Notes,” collectively with the 2021 Notes, the 2022 Notes and the 2025 Notes, the “Notes”). As a result of the Company’s financing and liquidity measures implemented to date as a direct response to the COVID-19 pandemic, Ladder repurchased an aggregate principal of the Notes of $139.1 million, recognizing a gain on extinguishment of debt of $19.0 million, offset by accelerated deferred financing cost amortization of $1.5 million during the three months ended June 30, 2020.

2027 Notes

On January 30, 2020, LCFH and Ladder Capital Finance Corporation (“LCFC”), a wholly-owned subsidiary of LCFH, issued $750.0 million in aggregate principal amount of 4.25% senior notes due February 1, 2027. The 2027 Notes require interest payments semi-annually in cash in arrears on August 1 and February 1 of each year, beginning on August 1, 2020. The 2027 Notes will mature on February 1, 2027. The 2027 Notes are unsecured and are subject to an unencumbered assets to unsecured debt covenant. The Company may redeem the 2027 Notes, in whole, at any time, or from time to time, prior to their stated maturity. At any time on or after February 1, 2023, the Company may redeem the 2027 Notes in whole or in part, upon not less than 15 nor more than 60 days’ notice, at a redemption price defined in the indenture governing the 2027 Notes, plus accrued and unpaid interest, if any, to the redemption date. Net proceeds of the offering were used to repay secured indebtedness. During the six months ended June 30, 2020, the Company retired $92.0 million of principal of the 2027 Notes for a repurchase price of $78.4 million, recognizing a $12.3 million net gain on extinguishment of debt after recognizing $(1.3) million of unamortized debt issuance costs associated with the retired debt. As of June 30, 2020, the remaining $658.0 million in aggregate principal amount of the 2027 Notes is due February 1, 2027.

2025 Notes

On September 25, 2017, LCFH and LCFC issued $400.0 million in aggregate principal amount of 5.25% senior notes due October 1, 2025. During the six months ended June 30, 2020, the Company retired $49.2 million of principal of the 2025 Notes for a repurchase price of $42.6 million, recognizing a $6.2 million net gain on extinguishment of debt after recognizing $(0.5) million of unamortized debt issuance costs associated with the retired debt. As of June 30, 2020, the remaining $350.8 million in aggregate principal amount of the 2025 Notes is due October 1, 2025.

2022 Notes

On March 16, 2017, LCFH issued $500.0 million in aggregate principal amount of 5.250% senior notes due March 15, 2022. During the six months ended June 30, 2020, the Company retired $14.4 million of principal of the 2022 Notes for a repurchase price of $13.8 million, recognizing a $0.6 million net gain on extinguishment of debt after recognizing $(0.1) million of unamortized debt issuance costs associated with the retired debt. As of June 30, 2020, the remaining $485.6 million in aggregate principal amount of the 2022 Notes is due March 15, 2022.

2021 Notes

On August 1, 2014, LCFH and LCFC issued $300.0 million in aggregate principal amount of 5.875% senior notes due August 1, 2021. During the six months ended June 30, 2020, the Company retired $7.7 million of principal of the 2021 Notes for a repurchase price of $7.5 million, recognizing a $0.2 million net gain on extinguishment of debt after recognizing $(20.0) thousand of unamortized debt issuance costs associated with the retired debt. As of June 30, 2020, the remaining $258.5 million in aggregate principal amount of the 2021 Notes is due August 1, 2021.

Financing Strategy in Current Market Conditions

In March 2020, as the COVID-19 health crisis rapidly transformed into a financial crisis, management took swift action to increase liquidity resources and actively manage its financing arrangements with its bank partners. In an abundance of caution, the Company first drew down on its $266.4 million unsecured revolving credit facility, which continues to be fully-drawn, and the proceeds continue to be held as unrestricted cash on the Company’s balance sheet as of July 30, 2020.

Securities Repurchase Facilities: The Company invests in AAA-rated CRE CLO securities, typically front pay securities, with relatively short duration and significant subordination. These securities have historically been financed with short-term maturity repurchase agreements with various bank counterparties. The Company has been able to continue to access securities repurchase funding and the pricing of such borrowings has improved during the three months ended June 30, 2020 as liquidity returned to the market and pricing for the securities that serve as collateral improved. Furthermore, during the three months ended June 30, 2020, the Company paid down $275.8 million of securities repurchase financing, primarily through sales of securities. As of July 27, 2020, the Company had $834.4 million outstanding of securities repurchase financing with maturities ranging from 3 days to 17 months.

Federal Home Loan Bank (“FHLB”) Financing: As discussed in the Company’s Annual Report, in 2016, the FHFA adopted a final rule that limited our captive insurance subsidiary’s membership in the FHLB, requiring us to significantly reduce the amounts of FHLB borrowings outstanding by February of 2021.

During the three months ended June 30, 2020, the Company paid down FHLB borrowings of $646.8 million, with $360.8 million outstanding as of July 27, 2020. The remaining maturities are staggered out through 2024. Funding for future advance paydowns would be obtained from the natural amortization of securities over time, loan pay offs and/or sales of loan and securities collateral. The Company incurred $6.5 million in prepayment penalties related to this paydown of FHLB borrowings.

Loan Repurchase Financing: The Company has maintained a consistent dialogue with its loan financing counterparties since the COVID-19 crisis unfolded in late March 2020. In addition to using proceeds from the Company’s 2027 Notes offering in January to reduce secured debt, during the three months ended June 30, 2020, the Company paid down over $155.9 million on such loan repurchase financing through loan collateral pay offs and loans securitized through a CLO financing transaction (see above).

As of July 27, 2020, the Company had $374.9 million of loan repurchase debt outstanding with five separate bank counterparties. The Company continues to maintain an active dialogue with its bank counterparties as it expects loan collateral on each of their lines to experience some measure of forbearance.

Secured Financing Facility: On April 30, 2020, the Company entered into a strategic financing arrangement (the “Agreement”) with an American multinational corporation (the “Lender”), under which the Lender will provide the Company with approximately $206.4 million in senior secured financing (the “Secured Financing Facility”) to fund transitional and land loans (see above).

Completion of Private CLO: On April 27, 2020, the Company completed a private CLO financing transaction with a major U.S. bank which generated $310.2 million of gross proceeds, financing $481.3 million of loans at a 64.5% advance rate on a matched term, non-mark-to-market and non-recourse basis (see above).

As a result of our financing and liquidity measures implemented to date in direct response to the COVID-19 pandemic, as of July 27, 2020, Ladder had over $750.0 million of unrestricted cash on hand. Based on the financing actions described above, the Company has significantly decreased its exposure to mark-to-market financing.

Financial Covenants

We were in compliance with all covenants described in the Company’s Annual Report, as of June 30, 2020.

DERIVATIVE INSTRUMENTS

6 Months Ended

Jun. 30, 2020

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE INSTRUMENTS

8. DERIVATIVE INSTRUMENTS

The Company uses derivative instruments primarily to economically manage the fair value variability of fixed rate assets caused by interest rate fluctuations and overall portfolio market risk. The following is a breakdown of the derivatives outstanding as of June 30, 2020 and December 31, 2019 ($ in thousands):

June 30, 2020


			Fair Value					Remaining Maturity (years)
Contract Type	Notional		Asset(1)		Liability(1)

Caps
1 Month LIBOR	$	69,571	$	—	$	—	0.86
Futures
5-year Swap	24,400		103		—		0.25
10-year Swap	61,000		258		—		0.25
5-year U.S. Treasury Note	4,500		19		—		0.25

Total futures	89,900		380		—







Total derivatives	$	159,471	$	380	$	—

(1)Shown as derivative instruments, at fair value, in the accompanying consolidated balance sheets.

December 31, 2019


			Fair Value					Remaining Maturity (years)
Contract Type	Notional		Asset(1)		Liability(1)

Caps
1Month LIBOR	$	69,571	$	—	$	—	0.36
Futures
5-year Swap	46,000		158		—		0.25
10-year Swap	149,800		516		—		0.25
5-year U.S. Treasury Note	1,100		4		—		0.25

Total futures	196,900		678		—


Credit Derivatives

S&P 500 Put Options	143,300		15		—		0.05

Total credit derivatives	143,300		15		—
Total derivatives	$	409,771	$	693	$	—

(1)Shown as derivative instruments, at fair value, in the accompanying consolidated balance sheets.

The following table indicates the net realized gains (losses) and unrealized appreciation (depreciation) on derivatives, by primary underlying risk exposure, as included in net result from derivatives transactions in the consolidated statements of operations for the three and six months ended June 30, 2020 and 2019 ($ in thousands):


	Three Months Ended June 30, 2020										Six Months Ended June 30, 2020
	Unrealized Gain/(Loss)		Realized Gain/(Loss)		Net Result from Derivative Transactions		Unrealized Gain/(Loss)		Realized Gain/(Loss)		Net Result from Derivative Transactions

Contract Type

Futures	$	(570)	$	(326)	$	(896)	$	(298)	$	(16,272)	$	(16,570)

Credit Derivatives	—		83		83		111		211		322
Total	$	(570)	$	(243)	$	(813)	$	(187)	$	(16,061)	$	(16,248)


	Three Months Ended June 30, 2019										Six Months Ended June 30, 2019
	Unrealized Gain/(Loss)		Realized Gain/(Loss)		Net Result from Derivative Transactions		Unrealized Gain/(Loss)		Realized Gain/(Loss)		Net Result from Derivative Transactions

Contract Type

Futures	$	(1,046)	$	(14,361)	$	(15,407)	$	1,511	$	(27,894)	$	(26,383)

Credit Derivatives	66		(116)		(50)		—		(108)		(108)
Total	$	(980)	$	(14,477)	$	(15,457)	$	1,511	$	(28,002)	$	(26,491)

The Company’s counterparties held $1.7 million and $3.5 million of cash margin as collateral for derivatives as of June 30, 2020 and December 31, 2019, respectively, which is included in restricted cash in the consolidated balance sheets.

Futures

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

The Company is required to post initial margin and daily variation margin for our interest rate futures that are centrally cleared by CME. CME determines the fair value of our centrally cleared futures, including daily variation margin. Effective January 3, 2017, CME amended their rulebooks to legally characterize daily variation margin payments for centrally cleared interest rate futures as settlement rather than collateral. As a result of this rule change, variation margin pledged on the Company’s centrally cleared interest rate futures is settled against the realized results of these futures.

OFFSETTING ASSETS AND LIABILITIES

6 Months Ended

Jun. 30, 2020

Offsetting [Abstract]

OFFSETTING ASSETS AND LIABILITIES

9. OFFSETTING ASSETS AND LIABILITIES

The following tables present both gross information and net information about derivatives and other instruments eligible for offset in the statement of financial position as of June 30, 2020 and December 31, 2019. The Company’s accounting policy is to record derivative asset and liability positions on a gross basis; therefore, the following tables present the gross derivative asset and liability positions recorded on the balance sheets, while also disclosing the eligible amounts of financial instruments and cash collateral to the extent those amounts could offset the gross amount of derivative asset and liability positions. The actual amounts of collateral posted by or received from counterparties may be in excess of the amounts disclosed in the following tables as the following only disclose amounts eligible to be offset to the extent of the recorded gross derivative positions.

As of June 30, 2020

Offsetting of Financial Assets and Derivative Assets

($ in thousands)


Description	Gross amounts of recognized assets		Gross amounts offset in the balance sheet		Net amounts of assets presented in the balance sheet		Gross amounts not offset in the balance sheet						Net amount
											Financial instruments			Cash collateral received/(posted)(1)

Derivatives	$	380	$	—	$	380	$	—	$	—	$	380
Total	$	380	$	—	$	380	$	—	$	—	$	380

(1)Included in restricted cash on consolidated balance sheets.

As of June 30, 2020

Offsetting of Financial Liabilities and Derivative Liabilities

($ in thousands)


Description	Gross amounts of recognized liabilities		Gross amounts offset in the balance sheet		Net amounts of liabilities presented in the balance sheet		Gross amounts not offset in the balance sheet						Net amount
											Financial instruments collateral			Cash collateral posted/(received)(1)


Repurchase agreements	$	1,295,029	$	—	$	1,295,029	$	1,295,029	$	—	$	—
Total	$	1,295,029	$	—	$	1,295,029	$	1,295,029	$	—	$	—

(1)Included in restricted cash on consolidated balance sheets.

As of December 31, 2019

Offsetting of Financial Assets and Derivative Assets

($ in thousands)


Description	Gross amounts of recognized assets		Gross amounts offset in the balance sheet		Net amounts of assets presented in the balance sheet		Gross amounts not offset in the balance sheet						Net amount
											Financial instruments			Cash collateral received/(posted)(1)

Derivatives	$	693	$	—	$	693	$	—	$	—	$	693
Total	$	693	$	—	$	693	$	—	$	—	$	693

(1)Included in restricted cash on consolidated balance sheets.

As of December 31, 2019

Offsetting of Financial Liabilities and Derivative Liabilities

($ in thousands)


Description	Gross amounts of recognized liabilities		Gross amounts offset in the balance sheet		Net amounts of liabilities presented in the balance sheet		Gross amounts not offset in the balance sheet						Net amount
											Financial instruments collateral			Cash collateral posted/(received)


Repurchase agreements	$	1,815,934	$	—	$	1,815,934	$	1,815,934	$	—	$	—
Total	$	1,815,934	$	—	$	1,815,934	$	1,815,934	$	—	$	—

(1)Included in restricted cash on consolidated balance sheets.

Master netting agreements that the Company has entered into with its derivative and repurchase agreement counterparties allow for netting of the same transaction, in the same currency, on the same date. Assets, liabilities, and collateral subject to master netting agreements as of June 30, 2020 and December 31, 2019 are disclosed in the tables above. The Company does not present its derivative and repurchase agreements net on the consolidated financial statements as it has elected gross presentation.

CONSOLIDATED VARIABLE INTEREST ENTITIES

6 Months Ended

Jun. 30, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

CONSOLIDATED VARIABLE INTEREST ENTITIES

10. CONSOLIDATED VARIABLE INTEREST ENTITIES

FASB ASC Topic 810 — Consolidation (“ASC 810”), provides guidance on the identification of entities for which control is achieved through means other than voting rights (“variable interest entities” or “VIEs”) and the determination of which business enterprise, if any, should consolidate the VIEs. Generally, the consideration of whether an entity is a VIE applies when either: (1) the equity investors (if any) lack one or more of the essential characteristics of a controlling financial interest; (2) the equity investment at risk is insufficient to finance that entity’s activities without additional subordinated financial support; or (3) the equity investors have voting rights that are not proportionate to their economic interests and the activities of the entity involve or are conducted on behalf of an investor with a disproportionately small voting interest. The Company consolidates VIEs in which it is considered to be the primary beneficiary. The primary beneficiary is the entity that has both of the following characteristics: (1) the power to direct the activities that, when taken together, most significantly impact the VIE’s performance; and (2) the obligation to absorb losses and right to receive the returns from the VIE that would be significant to the VIE. The Operating Partnership is a VIE and as such, substantially all of the consolidated balance sheet is a consolidated VIE. In addition, the Operating Partnership consolidates one collateralized loan obligation (“CLO”) VIE with the following balance sheet ($ in thousands):


	June 30, 2020
	Notes 3 & 7


Restricted cash	$	8,649,072
Mortgage loan receivables held for investment, net, at amortized cost	469,505,178

Accrued interest receivable	1,769,859

Total assets	$	479,924,109

Senior and unsecured debt obligations	$	299,604,861

Accrued expenses	697,612

Total liabilities	300,302,473

Net equity in VIEs (eliminated in consolidation)	179,621,636

Total equity	179,621,636

Total liabilities and equity	$	479,924,109

EQUITY STRUCTURE AND ACCOUNTS

6 Months Ended

Jun. 30, 2020

Equity [Abstract]

EQUITY STRUCTURE AND ACCOUNTS

11. EQUITY STRUCTURE AND ACCOUNTS

Exchange for Class A Common Stock

Pursuant to the Third Amended and Restated LLLP Agreement of LCFH, the Continuing LCFH Limited Partners may from time to time, subject to certain conditions, receive one share of the Company’s Class A common stock in exchange for (i) one share of the Company’s Class B common stock, (ii) one Series REIT LP Unit and (iii) either one Series TRS LP Unit or one TRS I LLC Share, subject to equitable adjustments for stock splits, stock dividends and reclassifications.

During the six months ended June 30, 2020, 6,779,225 Series REIT LP Units and 6,779,225 Series TRS LP Units were collectively exchanged for 6,779,225 shares of Class A common stock and 6,779,225 shares of Class B common stock were canceled. We received no other consideration in connection with these exchanges. As of June 30, 2020, the Company held a 95.5% interest in LCFH.

During the six months ended June 30, 2019, 1,139,411 Series REIT LP Units and 1,139,411 Series TRS LP Units were collectively exchanged for 1,139,411 shares of Class A common stock; and 1,139,411 shares of Class B common stock were canceled. We received no other consideration in connection with these exchanges. As of June 30, 2019, the Company held a 89.8% interest in LCFH.

Stock Repurchases

On October 30, 2014, the board of directors authorized the Company to repurchase up to $50.0 million of the Company’s Class A common stock from time to time without further approval. Stock repurchases by the Company are generally made for cash in open market transactions at prevailing market prices but may also be made in privately negotiated transactions or otherwise. The timing and amount of purchases are determined based upon prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. As of June 30, 2020, the Company has a remaining amount available for repurchase of $39.5 million, which represents 4.2% in the aggregate of its outstanding Class A common stock, based on the closing price of $8.10 per share on such date.

The following table is a summary of the Company’s repurchase activity of its Class A common stock during the six months ended June 30, 2020 and 2019 ($ in thousands):


	Shares	Amount(1)

Authorizations remaining as of December 31, 2019		$	41,132
Additional authorizations		—
Repurchases paid	210,151	(1,682)
Repurchases unsettled		—
Authorizations remaining as of June 30, 2020		$	39,450

(1)Amount excludes commissions paid associated with share repurchases.


	Shares	Amount(1)

Authorizations remaining as of December 31, 2018		$	41,769
Additional authorizations		—
Repurchases paid	40,065	(637)
Repurchases unsettled		—
Authorizations remaining as of June 30, 2019		$	41,132

(1)Amount excludes commissions paid associated with share repurchases.

Dividends

The following table presents dividends declared (on a per share basis) of Class A common stock for the six months ended June 30, 2020 and 2019:


Declaration Date	Dividend per Share

February 27, 2020	$	0.340
May 28, 2020	0.200


	$	0.540

February 27, 2019	$	0.340
May 30, 2019	0.340


Total	$	0.680

Changes in Accumulated Other Comprehensive Income

The following table presents changes in accumulated other comprehensive income related to the cumulative difference between the fair market value and the amortized cost basis of securities classified as available for sale for the six months ended June 30, 2020 and 2019 ($ in thousands):


	Accumulated Other Comprehensive Income (Loss)		Accumulated Other Comprehensive Income (Loss) of Noncontrolling Interests		Total Accumulated Other Comprehensive Income (Loss)

December 31, 2019	$	4,218	$	477	$	4,695
Other comprehensive income (loss)	(46,530)		(5,354)		(51,884)
Exchange of noncontrolling interest for common stock	(4,915)		4,915		—
Rebalancing of ownership percentage between Company and Operating Partnership	2,147		(2,147)		—
June 30, 2020	$	(45,080)	$	(2,109)	$	(47,189)


	Accumulated Other Comprehensive Income (Loss)		Accumulated Other Comprehensive Income (Loss) of Noncontrolling Interests		Total Accumulated Other Comprehensive Income (Loss)

December 31, 2018	$	(4,649)	$	(588)	$	(5,237)
Other comprehensive income (loss)	16,738		2,044		18,782
Exchange of noncontrolling interest for common stock	65		(65)		—
Rebalancing of ownership percentage between Company and Operating Partnership	17		(17)		—
June 30, 2019	$	12,171	$	1,374	$	13,545

NONCONTROLLING INTERESTS	6 Months Ended
NONCONTROLLING INTERESTS	Jun. 30, 2020
Noncontrolling Interest [Abstract]
NONCONTROLLING INTERESTS	12. NONCONTROLLING INTERESTS There are two main types of noncontrolling interest reflected in the Company’s consolidated financial statements (i) noncontrolling interest in the operating partnership and (ii) noncontrolling interest in consolidated joint ventures. Noncontrolling Interest in the Operating Partnership As more fully described in Note 1, certain of the predecessor equity owners continue to own interests in the Operating Partnership as modified by the IPO Transactions. These interests were subsequently further modified by the REIT Structuring Transactions (also described in Note 1). These interests, along with the Class B shares held by these investors, are exchangeable for Class A shares of the Company. The roll-forward of the Operating Partnership’s LP Units follow the Class B common stock of the Company as disclosed in the consolidated statements of changes in equity. Pursuant to ASC 810, Consolidation, on the accounting and reporting for noncontrolling interests and changes in ownership interests of a subsidiary, changes in a parent’s ownership interest (and transactions with noncontrolling interest unitholders in the subsidiary), while the parent retains its controlling interest in its subsidiary, should be accounted for as equity transactions. The carrying amount of the noncontrolling interest shall be adjusted to reflect the change in its ownership interest in the subsidiary, with the offset to equity attributable to the parent. Accordingly, as a result of Continuing LCFH Limited Partners exchanges which caused changes in ownership percentages between the Company’s Class A shareholders and the noncontrolling interests in the Operating Partnership that occurred during the six months ended June 30, 2020, the Company has decreased noncontrolling interests in the Operating Partnership and accumulated other comprehensive income and increased additional paid-in capital in the Company’s shareholders’ equity by $1.2 million as of June 30, 2020. Distributions to Noncontrolling Interest in the Operating Partnership Notwithstanding the foregoing, subject to any restrictions in applicable debt financing agreements and available liquidity as determined by the board of directors of each of Series REIT of LCFH and Series TRS of LCFH, each Series must use commercially reasonable efforts to make quarterly distributions to each of its partners (including the Company) at least equal to such partner’s “Quarterly Estimated Tax Amount,” which shall be computed (as more fully described in LCFH’s Third Amended and Restated LLLP Agreement) for each partner as the product of (x) the U.S. federal taxable income (or alternative minimum taxable income, if higher) allocated by such Series to such partner in respect of the Series REIT LP Units and Series TRS LP Units held by such partner and (y) the highest marginal blended U.S. federal, state and local income tax rate (or alternative minimum taxable rate, as applicable) applicable to an individual residing in New York, NY, taking into account, for U.S. federal income tax purposes, the deductibility of state and local taxes; provided that Series TRS of LCFH may take into account, in determining the amount of tax distributions to holders of Series TRS LP Units, the amount of any distributions each such holder received from Series REIT of LCFH in excess of tax distributions. In addition, to the extent the Company requires an additional distribution from the Series of LCFH in excess of its quarterly tax distribution in order to pay its quarterly cash dividend, the Series of LCFH will be required to make a corresponding distribution of cash to each of their partners (other than the Company) on a pro-rata basis. Allocation of Income and Loss Income and losses and comprehensive income are allocated among the partners in a manner to reflect as closely as possible the amount each partner would be distributed under the Third Amended and Restated LLLP Agreement of LCFH upon liquidation of the Operating Partnership’s assets. Noncontrolling Interest in Consolidated Joint Ventures As of June 30, 2020, the Company consolidates five ventures in which there are other noncontrolling investors, which own between 10% - 29.4% of such ventures. These ventures hold investments in a 40-building student housing portfolio in Isla Vista, CA with a book value of $82.1 million, 11 office buildings in Richmond, VA with a book value of $72.4 million, a single-tenant office building in Ewing, NJ with a book value of $26.3 million, an industrial building in Lithia Springs, GA with an aggregate book value of $23.3 million and an apartment complex in Miami, FL with a book value of $37.3 million. The Company makes distributions and allocates income from these ventures to the noncontrolling interests in accordance with the terms of the respective governing agreements.

EARNINGS PER SHARE

6 Months Ended

Jun. 30, 2020

Earnings Per Share [Abstract]

EARNINGS PER SHARE

13. EARNINGS PER SHARE

The Company’s net income (loss) and weighted average shares outstanding for the three and six months ended June 30, 2020 and 2019 consist of the following:


	Three Months Ended June 30,						Six Months Ended June 30,
($ in thousands except share amounts)	2020		2019		2020		2019

Basic Net income (loss) available for Class A common shareholders	$	(4,189)	$	32,244	$	(19,918)	$	54,419
Diluted Net income (loss) available for Class A common shareholders	$	(4,189)	$	32,244	$	(19,918)	$	54,419
Weighted average shares outstanding
Basic	106,809,987		105,511,385		106,569,892		104,888,925
Diluted	106,809,987		105,892,420		106,569,892		105,742,589

The calculation of basic and diluted net income (loss) per share amounts for the three and six months ended June 30, 2020 and 2019 consist of the following:


	Three Months Ended June 30,						Six Months Ended June 30,
(In thousands except share amounts)	2020		2019		2020(1)		2019(1)

Basic Net Income (Loss) Per Share of Class A Common Stock
Numerator:
Net income (loss) attributable to Class A common shareholders	$	(4,189)	$	32,244	$	(19,918)	$	54,419
Denominator:
Weighted average number of shares of Class A common stock outstanding	106,809,987		105,511,385		106,569,892		104,888,925
Basic net income (loss) per share of Class A common stock	$	(0.04)	$	0.31	$	(0.19)	$	0.52

Diluted Net Income (Loss) Per Share of Class A Common Stock
Numerator:
Net income (loss) attributable to Class A common shareholders	$	(4,189)	$	32,244	$	(19,918)	$	54,419
Add (deduct) - dilutive effect of:
Amounts attributable to operating partnership’s share of Ladder Capital Corp net income (loss)(2)	—		—		—		—
Additional corporate tax (expense) benefit(2)	—		—		—		—
Diluted net income (loss) attributable to Class A common shareholders	(4,189)		32,244		(19,918)		54,419
Denominator:
Basic weighted average number of shares of Class A common stock outstanding	106,809,987		105,511,385		106,569,892		104,888,925
Add - dilutive effect of:
Shares issuable relating to converted Class B common shareholders(3)	—		—		—		—
Incremental shares of unvested Class A restricted stock(3)	—		381,035		—		853,664
Incremental shares of unvested stock options	—		—		—		—
Diluted weighted average number of shares of Class A common stock outstanding	106,809,987		105,892,420		106,569,892		105,742,589
Diluted net income (loss) per share of Class A common stock	$	(0.04)	$	0.30	$	(0.19)	$	0.51

(1)For three and six months ended June 30, 2020 and 2019, shares issuable relating to converted Class B common shareholders are excluded from the calculation of diluted EPS as the inclusion of such potential common shares in the calculation would be anti-dilutive.

(2)The Company is using the as-if converted method for the Class B common shareholders while adjusting for additional corporate income tax expense (benefit) for the described net income (loss) add-back.

(3)The Company is using the treasury stock method.

The shares of Class B common stock do not share in the earnings of Ladder Capital Corp and are, therefore, not participating securities. Accordingly, basic and diluted net income (loss) per share of Class B common stock has not been presented, although the assumed conversion of Class B common stock has been included in the presented diluted net income (loss) per share of Class A common stock.

STOCK BASED AND OTHER COMPENSATION PLANS

6 Months Ended

Jun. 30, 2020

Share-based Payment Arrangement [Abstract]

STOCK BASED AND OTHER COMPENSATION PLANS

14. STOCK BASED AND OTHER COMPENSATION PLANS

The following table summarizes the impact on the consolidated statement of operations of the various stock based compensation plans described in Note 14, Stock Based and Other Compensation Plans included within the Company’s Annual Report ($ in thousands):


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019














Stock Based Compensation Expense	$	2,712	$	3,469	$	16,738	$	14,761

Phantom Equity Investment Plan	561		(98)		(1,577)		704
Stock Options Exercised	—		—		270		—

Bonus Expense	—		7,717		(30)		14,501
Total	$	3,273	$	11,088	$	15,401	$	29,966

Summary of Stock and Shares/Options Nonvested/Outstanding

A summary of the grants is presented below:


	Three Months Ended June 30,										Six Months Ended June 30,
	2020				2019					2020			2019
	Number of Shares/Options	Weighted Average Fair Value Per Share		Number of Shares	Weighted Average Fair Value Per Share		Number of Shares/Options	Weighted Average Fair Value Per Share		Number of Shares/Options	Weighted Average Fair Value Per Share

Grants - Class A Common Stock	—	$	—	4,568	$	16.42	1,466,337	$	18.72	1,545,569	$	17.56
Grants - Class A Common Stock dividends	—	—		—	—		—	—		11,113	16.61
Stock Options	—	—		—	—		—	—		12,073	—

The table below presents the number of unvested shares and outstanding stock options at June 30, 2020 and changes during 2020 of the Class A Common stock and Stock Options of Ladder Capital Corp granted under the 2014 Omnibus Incentive Plan:


	Restricted Stock	Stock Options

Nonvested/Outstanding at December 31, 2019	1,436,683	994,208
Granted	1,466,337	—
Exercised		(83,845)
Vested	(1,209,771)
Forfeited	(24,089)	—
Expired		—
Nonvested/Outstanding at June 30, 2020	1,669,160	910,363

Exercisable at June 30, 2020		910,363

At June 30, 2020 there was $21.0 million of total unrecognized compensation cost related to certain share-based compensation awards that is expected to be recognized over a period of up to 26.8 months, with a weighted-average remaining vesting period of 32 months.

2014 Omnibus Incentive Plan

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

Annual Incentive Awards Granted in 2020 with Respect to 2019 Performance

For 2019 performance, certain employees received stock-based incentive equity. Fair value for all restricted and unrestricted stock grants was calculated using the closing stock price on the grant date. Compensation expense for unrestricted stock grants will be expensed immediately. The Company has elected to recognize the compensation expense related to the time-based vesting of the annual restricted stock awards for the entire award on a straight-line basis over the requisite service period for the entire award. Restricted stock subject to performance criteria is eligible to vest in three equal installments upon the compensation committee’s confirmation that the Company achieves a return on equity, based on core earnings divided by the Company’s average book value of equity, equal to or greater than 8% for such year (the “Performance Target”) for the years ended December 31, 2020, 2021 and 2022, respectively. If the Company misses the Performance Target during either the first or second calendar year but meets the Performance Target for a subsequent year during the three year performance period and the Company’s return on equity for such subsequent year and any years for which it missed its Performance Target equals or exceeds the compounded return on equity of 8%, based on core earnings divided by the Company’s average book value of equity, the performance-vesting restricted stock which failed to vest because the Company previously missed its Performance Target will vest subject to continued employment on the applicable vesting date (the “Catch-Up Provision”). Accruals of compensation cost for an award with a performance condition shall be based on the probable outcome of that performance condition. Therefore, compensation cost shall be accrued if it is probable that the performance condition will be achieved and shall not be accrued if it is not probable that the performance condition will be achieved. In view of the adverse impacts of COVID-19 on the Company’s operations and investments and the resulting intensified corporate focus on defensive actions, including maintaining high levels of unrestricted cash liquidity and refinancing debt with more expensive non-mark-to-market funding sources, the Company is no longer classifying the 2020 Performance Target as probable as of June 30, 2020 and has reversed $1.0 million of previous compensation expense relating to grants of restricted stock with a December 2020 performance hurdle as their last vesting date (not available to take advantage of the Catch-Up Provision). However, recognizing that Ladder’s employees took these actions that, while in the best interests of the Company and its shareholders, would not produce earnings consistent with the Performance Target in their deferred compensation arrangements, on May 27, 2020, the compensation committee of the board of directors used its discretion to waive the Performance Target for shares eligible to vest based on the Company’s performance in 2020 and 2021, subject to continued employment on the applicable vesting dates. The Company recorded $0.1 million of incremental compensation cost during the three and six months ended June 30, 2020 as a result of this modification. There are currently 48 Ladder employees and one consultant eligible for such waiver.

On February 18, 2020, in connection with 2019 compensation, annual stock and restricted stock awards were granted to management grantees, other than Ms. Porcella, with an aggregate fair value of $12.5 million which represents 667,201 shares of restricted Class A common stock. The grant to Ms. Porcella is subject to the same time-based and performance-based vesting described below for non-management grantees and her shares are included in that total. The grant to Mr. Harris, and 50% of the grants to Mr. Fox, Ms. McCormack and Mr. Perelman, were unrestricted. The other 50% of incentive equity granted to Mr. Fox, Ms. McCormack and Mr. Perelman is restricted stock subject to performance criteria as described above.

On February 18, 2020, in connection with 2019 compensation, stock awards were granted to Ms. Porcella and non-management employees (“Non-Management Grantees”) with an aggregate value of $14.5 million which represents 775,100 shares of mostly restricted Class A common stock. Fifty percent of most stock awards is subject to time-based vesting criteria, and the remaining 50% of these stock awards is subject to attainment of the Performance Target for the applicable years. The time-vesting restricted stock will vest in three installments on February 18 of each of 2021, 2022 and 2023 subject to continued employment on the applicable vesting dates. The performance-vesting restricted stock will vest in three equal installments upon the compensation committee’s confirmation that the Company achieves the Performance Target for the years ended December 31, 2020, 2021 and 2022, respectively. The Catch-Up Provision applies to the performance vesting portion of this award. The compensation expense related to the performance-based restricted stock granted on February 18, 2020 shall be recognized 1/3 for the period February 18, 2020 through February 18, 2021, 1/3 for the period February 19, 2021 through February 18, 2022 and 1/3 for the period February 19, 2022 through February 18, 2023.

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

Upon a change in control (as defined in the respective award agreements), restricted stock awards to Mr. Fox, Ms. McCormack and Mr. Perelman will become fully vested if (1) such management grantee continues to be employed through the closing of the change in control or (2) after the signing of definitive documentation related to the change in control, but prior to its closing, such management grantee’s employment is terminated without cause or due to death or disability or the management grantee resigns for Good Reason, as described in the Company’s definitive proxy statement filed with the SEC on April 28, 2020. The compensation committee retains the right, in its sole discretion, to provide for the accelerated vesting (in whole or in part) of the restricted stock and option awards granted.

2020 Restricted Stock Awards

On February 18, 2020, certain members of the board of directors each received Annual Restricted Stock Awards with a grant date fair value of $0.4 million, representing 24,036 shares of restricted Class A common stock, which will vest in full on the first anniversary of the date of grant, subject to continued service on the board of directors. Compensation expense related to the time-based vesting criteria of the award shall be recognized on a straight-line basis over the one year vesting period. On March 26, 2020, 5,803 shares of restricted Class A common stock were forfeited when a member resigned from the board of directors.

Bonus Payments

On February 6, 2020, the board of directors of Ladder Capital Corp approved the 2019 bonus payments to employees, including officers, totaling $55.2 million, which included $27.0 million of equity based compensation. The bonuses were accrued for as of December 31, 2019 and paid to employees in full on February 14, 2020. On February 7, 2019, the board of directors of Ladder Capital Corp approved the 2018 bonus payments to employees, including officers, totaling $61.4 million, which included $26.6 million of equity based compensation. The bonuses were accrued for as of December 31, 2018 and paid to employees in full on February 15, 2019. During the three and six months ended June 30, 2020, the Company recorded no compensation expense related to bonuses due to the significant market disruption caused by the COVID-19 pandemic and the substantial economic uncertainty present in the commercial real estate market and overall economy. During the three and six months ended June 30, 2019, the Company recorded compensation expense of $7.7 million and $14.5 million, respectively, related to bonuses.

FAIR VALUE OF FINANCIAL INSTRUMENTS

6 Months Ended

Jun. 30, 2020

Fair Value Disclosures [Abstract]

FAIR VALUE OF FINANCIAL INSTRUMENTS

15. FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair value is based upon internal models, using market quotations, broker quotations, counterparty quotations or pricing services quotations, which provide valuation estimates based upon reasonable market order indications and are subject to significant variability based on market conditions, such as interest rates, credit spreads and market liquidity. The fair value of the mortgage loan receivables held for sale is based upon a securitization model utilizing market data from recent securitization spreads and pricing.

Fair Value Summary Table

The carrying values and estimated fair values of the Company’s financial instruments, which are both reported at fair value on a recurring basis (as indicated) or amortized cost/par, at June 30, 2020 and December 31, 2019 are as follows ($ in thousands):

June 30, 2020


									Weighted Average
	Outstanding Face Amount			Amortized Cost Basis/Purchase Price		Fair Value		Fair Value Method	Yield %		Remaining Maturity/Duration (years)
Assets:
CMBS(1)	$	1,496,090		$	1,495,892	$	1,447,338	Internal model, third-party inputs	1.57	%	2.27
CMBS interest-only(1)	1,535,739		(2)	25,026		25,510		Internal model, third-party inputs	2.83	%	2.34
GNMA interest-only(3)	93,464		(2)	1,335		1,379		Internal model, third-party inputs	4.21	%	3.18
Agency securities(1)	610			619		636		Internal model, third-party inputs	1.68	%	1.56
GNMA permanent securities(1)	30,853			31,006		31,870		Internal model, third-party inputs	3.50	%	2.41


Provision for current expected credit reserves	N/A			(19)		(19)		(5)	N/A		N/A
Mortgage loan receivables held for investment, net, at amortized cost:
Mortgage loan receivables held for investment, net, at amortized cost	2,971,622			2,955,084		2,928,796		Discounted Cash Flow(4)	6.82	%	1.22

Provision for current expected credit reserves	N/A			(49,102)		(49,102)		(5)	N/A		N/A
Mortgage loan receivables held for sale	86,456			85,977		87,960		Internal model, third-party inputs(6)	3.94	%	9.70
FHLB stock(7)	61,619			61,619		61,619		(7)	4.00	%	N/A
Nonhedge derivatives(1)(8)	89,900			N/A		380		Counterparty quotations	N/A		0.25

Liabilities:
Repurchase agreements - short-term	1,217,013			1,217,013		1,217,013		Discounted Cash Flow(9)	2.64	%	0.22
Repurchase agreements - long-term	78,016			78,016		78,016		Discounted Cash Flow(10)	1.56	%	1.27
Revolving credit facility	266,430			266,430		266,430		Discounted Cash Flow(9)	3.00	%	0.05
Mortgage loan financing	800,952			805,431		828,693		Discounted Cash Flow(10)	4.97	%	4.88
Secured financing facility	188,687			188,687		188,687		Discounted Cash Flow(9)	10.75	%	2.85
CLO debt	299,605			299,605		299,605		Discounted Cash Flow(9)	5.50	%	3.88

Borrowings from the FHLB	360,790			360,790		362,559		Discounted Cash Flow	1.39	%	2.67
Senior unsecured notes	1,752,817			1,737,542		1,025,236		Internal model, third-party inputs	4.97	%	4.16

Nonhedge derivatives(1)(8)	69,571			N/A		—		Counterparty quotations	N/A		0.86

(1)Measured at fair value on a recurring basis with the net unrealized gains or losses recorded as a component of other comprehensive income (loss) in equity.

(2)Represents notional outstanding balance of underlying collateral.

(3)Measured at fair value on a recurring basis with the net unrealized gains or losses recorded in current period earnings.

(4)Fair value for floating rate mortgage loan receivables, held for investment is estimated to approximate the outstanding face amount given the short interest rate reset risk (30 days) and no significant change in credit risk. Fair value for fixed rate mortgage loan receivables, held for investment is measured using a discounted cash flow model.

(5)Fair value is estimated to equal par value.

(6)Fair value for mortgage loan receivables, held for sale is measured using a hypothetical securitization model utilizing market data from recent securitization spreads and pricing.

(7)Fair value of the FHLB stock approximates outstanding face amount as the Company’s captive insurance subsidiary is restricted from trading the stock and can only put the stock back to the FHLB, at the FHLB’s discretion, at par.

(8)The outstanding face amount of the nonhedge derivatives represents the notional amount of the underlying contracts.

(9)Fair value for repurchase agreement liabilities - short term borrowings under the secured financing facility and borrowings under the revolving credit facility is estimated to approximate carrying amount primarily due to the short interest rate reset risk (30 days) of the financings and the high credit quality of the assets collateralizing these positions. If the collateral is determined to be impaired, the related financing would be revalued accordingly. There are no impairments on any positions.

(10)For repurchase agreements - long term, mortgage loan financing, and CLO debt the carrying value approximates the fair value discounting the expected cash flows at current market rates. If the collateral is determined to be impaired, the related financing would be revalued accordingly. There are no impairments on any positions.

December 31, 2019


									Weighted Average
	Outstanding Face Amount			Amortized Cost Basis		Fair Value		Fair Value Method	Yield %		Remaining Maturity/Duration (years)
Assets:
CMBS(1)	$	1,640,597		$	1,640,905	$	1,644,322	Internal model, third-party inputs	3.08	%	2.41
CMBS interest-only(1)	1,559,160		(2)	28,553		29,146		Internal model, third-party inputs	3.04	%	2.53
GNMA interest-only(3)	109,783		(2)	1,982		1,851		Internal model, third-party inputs	4.59	%	2.77
Agency securities(1)	629			640		637		Internal model, third-party inputs	1.73	%	1.83
GNMA permanent securities(1)	31,461			31,681		32,369		Internal model, third-party inputs	3.17	%	1.93

Equity securities(3)	N/A			12,848		12,980		Observable market prices	N/A		N/A
Mortgage loan receivables held for investment, net, at amortized cost:
Mortgage loan receivables held for investment, net, at amortized cost	3,277,596			3,257,036		3,273,219		Discounted Cash Flow(4)	6.94	%	1.43

Provision for loan losses	N/A			(20,500)		(20,500)		(5)	N/A		N/A
Mortgage loan receivables held for sale	122,748			122,325		124,989		Internal model, third-party inputs(6)	4.20	%	9.99
FHLB stock(7)	61,619			61,619		61,619		(7)	4.75	%	N/A
Nonhedge derivatives(1)(8)	340,200			N/A		693		Counterparty quotations	N/A		0.25

Liabilities:
Repurchase agreements - short-term	1,781,253			1,781,253		1,781,253		Discounted Cash Flow(9)	2.50	%	0.19
Repurchase agreements - long-term	34,681			34,681		34,681		Discounted Cash Flow(10)	2.81	%	1.41

Mortgage loan financing	807,854			812,606		838,766		Discounted Cash Flow(10)	4.91	%	5.65


Borrowings from the FHLB	1,073,500			1,073,500		1,080,354		Discounted Cash Flow	2.33	%	2.08
Senior unsecured notes	1,166,201			1,157,833		1,208,860		Internal model, third-party inputs	5.39	%	3.28

Nonhedge derivatives(1)(8)	69,571			N/A		—		Counterparty quotations	N/A		0.36

(1)Measured at fair value on a recurring basis with the net unrealized gains or losses recorded as a component of other comprehensive income (loss) in equity.

(2)Represents notional outstanding balance of underlying collateral.

(3)Measured at fair value on a recurring basis with the net unrealized gains or losses recorded in current period earnings.

(4)Fair value for floating rate mortgage loan receivables, held for investment is estimated to approximate the outstanding face amount given the short interest rate reset risk (30 days) and no significant change in credit risk. Fair value for fixed rate mortgage loan receivables, held for investment is measured using a discounted cash flow.

(5)Fair value is estimated to equal par value.

(6)Fair value for mortgage loan receivables, held for sale is measured using a hypothetical securitization model utilizing market data from recent securitization spreads and pricing.

(7)Fair value of the FHLB stock approximates outstanding face amount as the Company’s captive insurance subsidiary is restricted from trading the stock and can only put the stock back to the FHLB, at the FHLB’s discretion, at par.

(8)The outstanding face amount of the nonhedge derivatives represents the notional amount of the underlying contracts.

(9)Fair value for repurchase agreement liabilities is estimated to approximate carrying amount primarily due to the short interest rate reset risk (30 days) of the financings and the high credit quality of the assets collateralizing these positions. If the collateral is determined to be impaired, the related financing would be revalued accordingly. There are no impairments on any positions.

(10)For repurchase agreements - long term and mortgage loan financing, the carrying value approximates the fair value discounting the expected cash flows at current market rates. If the collateral is determined to be impaired, the related financing would be revalued accordingly. There are no impairments on any positions.

The following table summarizes the Company’s financial assets and liabilities, which are both reported at fair value on a recurring basis (as indicated) or amortized cost/par, at June 30, 2020 and December 31, 2019 ($ in thousands):

June 30, 2020


Financial Instruments Reported at Fair Value on Consolidated Statements of Financial Condition	Outstanding Face Amount			Fair Value
								Level 1			Level 2			Level 3	Total

Assets:
CMBS(1)	$	1,484,514		$	—	$	—		$	1,436,227		$	1,436,227
CMBS interest-only(1)	1,525,120		(2)	—		—			24,772			24,772
GNMA interest-only(3)	93,464		(2)	—		—			1,379			1,379
Agency securities(1)	610			—		—			636			636
GNMA permanent securities(1)	30,853			—		—			31,870			31,870


Nonhedge derivatives(4)	89,900			—		380			—			380
				$	—	$	380		$	1,494,884		$	1,495,264
Liabilities:
Nonhedge derivatives(4)	69,571			$	—	$	—		$	—		$	—

Financial Instruments Not Reported at Fair Value on Consolidated Statements of Financial Condition	Outstanding Face Amount			Fair Value
								Level 1			Level 2			Level 3	Total

Assets:
Mortgage loan receivable held for investment, net, at amortized cost:
Mortgage loans held by consolidated subsidiaries	$	2,971,622		$	—	$	—		$	2,928,796		$	2,928,796

Provision for current expected credit losses	N/A			—		—			(49,102)			(49,102)
Mortgage loan receivable held for sale	86,456			—		—			87,960			87,960
CMBS(5)	11,576			—		—			11,111			11,111
CMBS interest-only(5)	10,619		(2)	—		—			738			738
Provision for current expected credit losses	N/A								(19)			(19)

FHLB stock	61,619			—		—			61,619			61,619
				$	—	$	—		$	3,041,103		$	3,041,103
Liabilities:
Repurchase agreements - short-term	1,217,013			$	—	$	—		$	1,217,013		$	1,217,013
Repurchase agreements - long-term	78,016			—		—			78,016			78,016
Revolving credit facility	266,430			—		—			266,430			266,430
Mortgage loan financing	800,952			—		—			828,693			828,693
Secured financing facility	188,687			—		—			188,687			188,687
CLO debt	299,605			—		—			299,605			299,605

Borrowings from the FHLB	360,790			—		—			362,559			362,559
Senior unsecured notes	1,752,817			—		—			1,025,236			1,025,236

				$	—	$	—		$	4,266,239		$	4,266,239

(1)Measured at fair value on a recurring basis with the net unrealized gains or losses recorded as a component of other comprehensive income (loss) in equity.

(2)Represents notional outstanding balance of underlying collateral.

(3)Measured at fair value on a recurring basis with the net unrealized gains or losses recorded in current period earnings.

(4)Measured at fair value on a recurring basis with the net unrealized gains or losses recorded in current period earnings. The outstanding face amount of the nonhedge derivatives represents the notional amount of the underlying contracts.

(5)Restricted securities which are designated as risk retention securities under the Dodd-Frank Act and are therefore subject to transfer restrictions over the term of the securitization trust, which are classified as held-to-maturity and reported at amortized cost.

December 31, 2019


Financial Instruments Reported at Fair Value on Consolidated Statements of Financial Condition	Outstanding Face Amount			Fair Value
						Level 1			Level 2			Level 3			Total

Assets:
CMBS(1)	$	1,628,476		$	—	$	—		$	1,632,714		$	1,632,714
CMBS interest-only(1)	1,548,061		(2)	—		—			28,342			28,342
GNMA interest-only(3)	109,783		(2)	—		—			1,851			1,851
Agency securities(1)	629			—		—			637			637
GNMA permanent securities(1)	31,461			—		—			32,369			32,369

Equity securities	N/A			12,980		—			—			12,980
Nonhedge derivatives(4)	340,200			—		693			—			693
				$	12,980	$	693		$	1,695,913		$	1,709,586
Liabilities:
Nonhedge derivatives(4)	$	69,571		$	—	$	—		$	—		$	—


Financial Instruments Not Reported at Fair Value on Consolidated Statements of Financial Condition	Outstanding Face Amount			Fair Value
								Level 1			Level 2			Level 3		Total

Assets:
Mortgage loan receivable held for investment, net, at amortized cost:
Mortgage loans held by consolidated subsidiaries	$	3,277,597		$	—	$	—		$	3,273,219		$	3,273,219

Provision for loan losses	N/A			—		—			(20,500)			(20,500)
Mortgage loan receivables held for sale	122,748			—		—			124,989			124,989
CMBS(5)	12,121			—		—			11,608			11,608
CMBS interest-only(5)	11,099		(2)	—		—			804			804
FHLB stock	61,619			—		—			61,619			61,619
				$	—	$	—		$	3,451,739		$	3,451,739
Liabilities:
Repurchase agreements - short-term	1,781,253			$	—	$	—		$	1,781,253		$	1,781,253
Repurchase agreements - long-term	34,681			—		—			34,681			34,681

Mortgage loan financing	807,854			—		—			838,766			838,766


Borrowings from the FHLB	1,073,500			—		—			1,080,354			1,080,354
Senior unsecured notes	1,166,201			—		—			1,208,860			1,208,860

				$	—	$	—		$	4,943,914		$	4,943,914

(1)Measured at fair value on a recurring basis with the net unrealized gains or losses recorded as a component of other comprehensive income (loss) in equity.

(2)Represents notional outstanding balance of underlying collateral.

(3)Measured at fair value on a recurring basis with the net unrealized gains or losses recorded in current period earnings.

(4)Measured at fair value on a recurring basis with the net unrealized gains or losses recorded in current period earnings. The outstanding face amount of the nonhedge derivatives represents the notional amount of the underlying contracts.

(5)Restricted securities which are designated as risk retention securities under the Dodd-Frank Act and are therefore subject to transfer restrictions over the term of the securitization trust, which are classified as held-to-maturity and reported at amortized cost.

The following table summarizes changes in Level 3 financial instruments reported at fair value on the consolidated statements of financial condition for the six months ended June 30, 2020 and December 31, 2019 ($ in thousands):


	Six Months Ended June 30,
Level 3	2020		2019

Balance at January 1,	$	1,695,913	$	1,385,957
Transfer from level 2	—		—
Purchases	437,536		847,318
Sales	(517,535)		(379,961)
Paydowns/maturities	(52,271)		(110,400)
Amortization of premium/discount	(4,278)		(6,267)
Unrealized gain/(loss)	(51,709)		18,804
Realized gain/(loss) on sale(1)	(12,773)		7,242
Balance at June 30,	$	1,494,883	$	1,762,693

(1)Includes realized losses on securities recorded as other than temporary impairments.

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

June 30, 2020


Financial Instrument	Carrying Value			Valuation Technique	Unobservable Input	Minimum		Weighted Average		Maximum

CMBS(1)	$	1,436,227		Discounted cash flow	Yield (4)	1.42	%	3.54	%	10	%
					Duration (years)(5)	0.00		2.72		6.26
CMBS interest-only(1)	24,772		(2)	Discounted cash flow	Yield (4)	—	%	2.33	%	10	%
					Duration (years)(5)	0.10		2.34		3.28
					Prepayment speed (CPY)(5)	100.00		100.00		100.00
GNMA interest-only(3)	1,379		(2)	Discounted cash flow	Yield (4)	—	%	3.26	%	10	%
					Duration (years)(5)	0.00		2.45		6.57
					Prepayment speed (CPJ)(5)	5.00		15.42		35.00
Agency securities(1)	636			Discounted cash flow	Yield (4)	—	%	0.32	%	1.72	%
					Duration (years)(5)	0.00		2.02		2.48
GNMA permanent securities(1)	31,870			Discounted cash flow	Yield (4)	1.42	%	2.44	%	6.44	%
					Duration (years)(5)	1.15		9.89		14.81


Total	$	1,494,884

(1)CMBS, CMBS interest-only securities, Agency securities, GNMA construction securities, GNMA permanent securities and corporate bonds are classified as available-for-sale and reported at fair value with changes in fair value recorded in the current period in other comprehensive income.

(2)The amounts presented represent the principal amount of the mortgage loans outstanding in the pool in which the interest-only securities participate.

(3)Agency interest-only securities are recorded at fair value with changes in fair value recorded in current period earnings.

Sensitivity of the Fair Value to Changes in the Unobservable Inputs

(4)Significant increase (decrease) in the unobservable input in isolation would result in significantly lower (higher) fair value measurement.

(5)Significant increase (decrease) in the unobservable input in isolation would result in either a significantly lower or higher (lower or higher) fair value measurement depending on the structural features of the security in question.

December 31, 2019


Financial Instrument	Carrying Value			Valuation Technique	Unobservable Input	Minimum		Weighted Average		Maximum

CMBS(1)	$	1,632,714		Discounted cash flow	Yield (3)	—	%	3.11	%	19.92	%
					Duration (years)(4)	0.00		1.63		6.87
CMBS interest-only(1)	28,342		(2)	Discounted cash flow	Yield (3)	1.57	%	3.93	%	7.62	%
					Duration (years)(4)	0.26		2.47		3.51
					Prepayment speed (CPY)(4)	100.00		97.24		100.00
GNMA interest-only(3)	1,851		(2)	Discounted cash flow	Yield (4)	(4.82)	%	15.13	%	44.5	%
					Duration (years)(5)	0.85		2.90		13.69
					Prepayment speed (CPJ)(5)	5.00		12.36		35.00
Agency securities(1)	637			Discounted cash flow	Yield (4)	—	%	1.7	%	2.16	%
					Duration (years)(5)	0.00		2.30		2.92
GNMA permanent securities(1)	32,369			Discounted cash flow	Yield (4)	56.56	%	166.79	%	410	%
					Duration (years)(5)	2.60		3.61		6.49


Total	$	1,695,913

(1)CMBS, CMBS interest-only securities, Agency securities, GNMA construction securities, GNMA permanent securities and corporate bonds are classified as available-for-sale and reported at fair value with changes in fair value recorded in the current period in other comprehensive income.

(2)The amounts presented represent the principal amount of the mortgage loans outstanding in the pool in which the interest-only securities participate.

(3)Agency interest-only securities are recorded at fair value with changes in fair value recorded in current period earnings.

Sensitivity of the Fair Value to Changes in the Unobservable Inputs

(4)Significant increase (decrease) in the unobservable input in isolation would result in significantly lower (higher) fair value measurement.

(5)Significant increase (decrease) in the unobservable input in isolation would result in either a significantly lower or higher (lower or higher) fair value measurement depending on the structural features of the security in question.

Nonrecurring Fair Values

The Company measures fair value of certain assets on a nonrecurring basis when events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. Adjustments to fair value generally result from the application of lower of amortized cost or fair value accounting for assets held for sale or write-down of assets value due to impairment. Refer to Note 3, Mortgage Loan Receivables and Note 5, Real Estate and Related Lease Intangibles, Net for disclosure of level 3 inputs.

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

INCOME TAXES	6 Months Ended
INCOME TAXES	Jun. 30, 2020
Income Tax Disclosure [Abstract]
INCOME TAXES	16. INCOME TAXES The Company elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Code”), commencing with the taxable year ended December 31, 2015 (the REIT Election”). As such, the Company’s income is generally not subject to U.S. federal, state and local corporate income taxes other than as described below. Certain of the Company’s subsidiaries have elected to be treated as TRSs. TRSs permit the Company to participate in certain activities from which REITs are generally precluded, as long as these activities meet specific criteria, are conducted within the parameters of certain limitations established by the Code, and are conducted in entities which elect to be treated as taxable subsidiaries under the Code. To the extent these criteria are met, the Company will continue to maintain its qualification as a REIT. The Company’s TRSs are not consolidated for U.S. federal income tax purposes, but are instead taxed as corporations. For financial reporting purposes, a provision for current and deferred taxes is established for the portion of earnings recognized by the Company with respect to its interest in TRSs. Current income tax expense (benefit) was $1.6 million and $(15.0) million for the three and six months ended June 30, 2020, respectively. Current income tax expense (benefit) was $(1.3) million and $(7.4) million for the three and six months ended June 30, 2019, respectively. As of June 30, 2020 and December 31, 2019, the Company’s net deferred tax assets (liabilities) were $(12.0) million and $(2.1) million, respectively, and are included in other assets (other liabilities) in the Company’s consolidated balance sheets. Deferred income tax expense (benefit) included within the provision for income taxes was $(2.1) million and $9.9 million for the three and six months ended June 30, 2020, respectively. Deferred income tax expense (benefit) included within the provision for income taxes was $3.5 million and $6.7 million for the three and six months ended June 30, 2019, respectively. The Company’s net deferred tax liability is comprised of deferred tax assets and deferred tax liabilities. The Company believes it is more likely than not that the deferred tax assets (aside from the exception noted below) will be realized in the future. Realization of the deferred tax assets is dependent upon our generation of sufficient taxable income in future years in appropriate tax jurisdictions to obtain benefit from the reversal of temporary differences. The amount of deferred tax assets considered realizable is subject to adjustment in future periods if estimates of future taxable income change. As of June 30, 2020, the Company has a deferred tax asset of $9.9 million relating to capital losses which it may only use to offset capital gains. These tax attributes will begin to expire if unused in 2021. As the realization of these assets are not more likely than not before their expiration, the Company provided a full valuation allowance against this deferred tax asset. Additionally, as of June 30, 2020, the Company had a deferred tax asset of $1.1 million related to Code Section 163(j) interest expense limitation. As the Company is uncertain if this asset will be realized in the future, the Company provided a full valuation allowance against this deferred tax asset. The Company has historically calculated its tax provision during quarterly reporting periods by applying an annual effective tax rate (“AETR”) for the full year to the income for the reporting period; however, for the three and six months ended June 30, 2020, the Company used a discrete effective tax rate method to calculate taxes for the three and six months ended June 30, 2020. Based on the current projections of income, the Company is unable to determine a reliable AETR. As such, a discrete-period approach was used for the three and six months ended June 30, 2020. The Company’s tax returns are subject to audit by taxing authorities. Generally, as of June 30, 2020, the tax years 2016-2019 remain open to examination by the major taxing jurisdictions in which the Company is subject to taxes. The IRS recently completed its audit of the 2014 tax year and did not recommend any changes to the Company’s tax return. The Company is currently under New York City audit for tax years 2012-2014. Several of the Company’s subsidiary entities are under New York State audit for tax years 2015-2018. The Company does not expect these audits to result in any material changes to the Company’s financial position. The Company does not expect tax expense to have an impact on either short, or long-term liquidity or capital needs. The Company acquired certain corporate entities at the time of its IPO. The related acquisition agreements provided an indemnification to the Company by each transferor of any amounts due for any potential tax liabilities owed by these entities for tax years prior to their acquisition. In connection with a New York State audit settlement, the Company collected $2.5 million of indemnities under the acquisition agreements during 2019. Under U.S. GAAP, a tax benefit related to an income tax position may be recognized when it is more likely than not that the position will be sustained upon examination by the tax authorities based on the technical merits of the position. In addition, the Company does not believe that it has any tax positions for which it is reasonably possible that it will be required to record a significant liability for unrecognized tax benefits within the next twelve months. Tax Receivable Agreement Upon consummation of the IPO, the Company entered into a Tax Receivable Agreement with the Continuing LCFH Limited Partners. Under the Tax Receivable Agreement the Company generally is required to pay to those Continuing LCFH Limited Partners that exchange their interests in LCFH and Class B shares of the Company for Class A shares of the Company, 85% of the applicable cash savings, if any, in U.S. federal, state and local income tax that the Company realizes (or is deemed to realize in certain circumstances) as a result of (i) the increase in tax basis in its proportionate share of LCFH’s assets that is attributable to the Company as a result of the exchanges and (ii) payments under the Tax Receivable Agreement, including any tax benefits related to imputed interest deemed to be paid by the Company as a result of such agreement. The Company may make future payments under the Tax Receivable Agreement if the tax benefits are realized. The Company would then benefit from the remaining 15% of cash savings in income tax that we realize. For purposes of the Tax Receivable Agreement, cash savings in income tax will be computed by comparing our actual income tax liability to the amount of such taxes that we would have been required to pay had there been no increase to the tax basis of the assets of LCFH as a result of the exchanges and had we not entered into the Tax Receivable Agreement. As of June 30, 2020 and December 31, 2019, pursuant to the Tax Receivable Agreement, the Company recorded a liability of $1.6 million, included in other liabilities in the consolidated balance sheets for Continuing LCFH Limited Partners.

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References + Details

RELATED PARTY TRANSACTIONS	6 Months Ended
RELATED PARTY TRANSACTIONS	Jun. 30, 2020
Related Party Transactions [Abstract]
RELATED PARTY TRANSACTIONS	17. RELATED PARTY TRANSACTIONS Ladder Select Bond Fund On October 18, 2016, Ladder Capital Asset Management LLC (“LCAM”), a subsidiary of the Company and a registered investment adviser, launched the Ladder Select Bond Fund (the “Fund”), a mutual fund. In addition, on October 18, 2016, the Company made a $10.0 million investment in the Fund, which was included in other assets in the consolidated balance sheets. On June 22, 2020, the Fund was liquidated and LCAM deregistered with the Securities and Exchange Commission (“SEC”). The Company recognized a realized loss of $0.7 million upon liquidation of the Fund which is included in fee and other income on the consolidated statements of income. Commercial Real Estate Loans From time to time, the Company may provide commercial real estate loans to entities affiliated with certain of our directors, officers or large shareholders who are, as part of their ordinary course of business, commercial real estate investors. These loans are made in the ordinary course of the Company’s business on the same terms and conditions as would be offered to any other borrower of similar type and standing on a similar property.

COMMITMENTS AND CONTINGENCIES	6 Months Ended
COMMITMENTS AND CONTINGENCIES	Jun. 30, 2020
Commitments and Contingencies Disclosure [Abstract]
COMMITMENTS AND CONTINGENCIES	18. COMMITMENTS AND CONTINGENCIES Leases The Company adopted ASC Topic 842 on January 1, 2019. The primary impact of applying ASC Topic 842 was the initial recognition of a $3.5 million lease liability and a $3.3 million right of use asset (including previously accrued straight line rent) on the Company’s consolidated financial statements, for leases classified as operating leases under ASC Topic 840, primarily for the Company’s corporate headquarters and other identified leases. As of June 30, 2020, the Company had a $1.9 million lease liability and a $1.9 million right-of-use asset on its consolidated balance sheets. Tenant reimbursements, which consist of real estate taxes and other municipal charges paid by us which were reimbursable by our tenants pursuant to the terms of triple-net lease agreements, were $1.1 million and $2.3 million for the three and six months ended June 30, 2020, respectively, and are included in operating lease income on the Company’s consolidated statements of income. Tenant reimbursements were $1.7 million and $3.3 million for the three and six months ended June 30, 2019, respectively, and are included in operating lease income on the Company’s consolidated statements of income. Investments in Unconsolidated Joint Ventures We have made investments in various unconsolidated joint ventures. See Note 6, Investment in and Advances to Unconsolidated Joint Ventures for further details of our unconsolidated investments. Our maximum exposure to loss from these investments is limited to the carrying value of our investments. Unfunded Loan Commitments As of June 30, 2020, the Company’s off-balance sheet arrangements consisted of $249.2 million of unfunded commitments on mortgage loan receivables held for investment to provide additional first mortgage loan financing over the next three years at rates to be determined at the time of funding, 62% of which additional funds relate to the occurrence of certain “good news” events, such as the owner concluding a lease agreement with a major tenant in the building or reaching some pre-determined net operating income. As of December 31, 2019, the Company’s off-balance sheet arrangements consisted of $286.5 million of unfunded commitments on mortgage loan receivables held for investment to provide additional first mortgage loan financing. Commitments are subject to our loan borrowers’ satisfaction of certain financial and nonfinancial covenants and may or may not be funded depending on a variety of circumstances including timing, credit metric hurdles, and other nonfinancial events occurring. The COVID-19 pandemic has impacted the progress of work generally and, depending on specific property locations, the progress of capital expenditures, construction, and leasing, which have been delayed and/or slower paced than originally anticipated. The progress of those particular projects located in States or local municipalities with continuing restrictions on such activities is anticipated to remain slower to complete than otherwise expected, and the pace of future funding relating to these capital needs has been, and may continue to be, commensurately slower. These commitments are not reflected on the consolidated balance sheets.

SEGMENT REPORTING

6 Months Ended

Jun. 30, 2020

Segment Reporting [Abstract]

SEGMENT REPORTING

19. SEGMENT REPORTING

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

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


	Loans		Securities		Real Estate(1)		Corporate/Other(2)		Company Total

Three months ended June 30, 2020
Interest income	$	53,641	$	8,177	$	2	$	276	$	62,096
Interest expense	(11,732)		(7,795)		(9,758)		(39,140)		(68,425)
Net interest income (expense)	41,909		382		(9,756)		(38,864)		(6,329)
(Provision) benefit for loan losses	726		3		—		—		729
Net interest income (expense) after provision for loan losses	42,635		385		(9,756)		(38,864)		(5,600)

Operating lease income	—		—		23,773		—		23,773


Sale of loans, net	(744)		—		—		—		(744)
Realized gain (loss) on securities	—		(14,798)		—		—		(14,798)
Unrealized gain (loss) on equity securities	—		401		—		—		401
Unrealized gain (loss) on Agency interest-only securities	—		98		—		—		98
Realized gain on sale of real estate, net	—		—		(1)		—		(1)

Fee and other income	2,429		2		—		1,074		3,505
Net result from derivative transactions	(588)		(225)		—		—		(813)
Earnings (loss) from investment in unconsolidated joint ventures	—		—		471		—		471

Gain (loss) on extinguishment of debt	—		—		—		19,017		19,017
Total other income (loss)	1,097		(14,522)		24,243		20,091		30,909

Salaries and employee benefits	—		—		—		(7,001)		(7,001)
Operating expenses(3)	—		—		—		(6,224)		(6,224)
Real estate operating expenses	—		—		(6,034)		—		(6,034)

Fee expense	(1,474)		(61)		(442)		—		(1,977)
Depreciation and amortization	—		—		(9,791)		(25)		(9,816)
Total costs and expenses	(1,474)		(61)		(16,267)		(13,250)		(31,052)

Income tax (expense) benefit	—		—		—		550		550
Segment profit (loss)	$	42,258	$	(14,198)	$	(1,780)	$	(31,473)	$	(5,193)

Total assets as of June 30, 2020	$	2,991,959	$	1,506,713	$	1,091,129	$	1,019,749	$	6,609,550


	Loans		Securities		Real Estate(1)		Corporate/Other(2)		Company Total

Three months ended June 30, 2019
Interest income	$	69,794	$	15,210	$	7	$	311	$	85,322
Interest expense	(14,224)		(4,130)		(9,091)		(24,924)		(52,369)
Net interest income (expense)	55,570		11,080		(9,084)		(24,613)		32,953
(Provision) benefit for loan losses	(300)		—		—		—		(300)
Net interest income (expense) after provision for loan losses	55,270		11,080		(9,084)		(24,613)		32,653

Operating lease income	—		—		27,780		—		27,780


Sale of loans, net	20,264		—		—		—		20,264
Realized gain (loss) on securities	—		4,464		—		—		4,464
Unrealized gain (loss) on equity securities	—		(990)		—		—		(990)
Unrealized gain (loss) on Agency interest-only securities	—		11		—		—		11
Realized gain on sale of real estate, net	—		—		(1,124)		—		(1,124)

Fee and other income	5,947		333		—		916		7,196
Net result from derivative transactions	(8,518)		(6,939)		—		—		(15,457)
Earnings (loss) from investment in unconsolidated joint ventures	—		—		1,564		—		1,564


Total other income (loss)	17,693		(3,121)		28,220		916		43,708

Salaries and employee benefits	—		—		—		(14,907)		(14,907)
Operating expenses(3)	—		—		—		(6,012)		(6,012)
Real estate operating expenses	—		—		(6,032)		—		(6,032)

Fee expense	(1,058)		(87)		(38)		—		(1,183)
Depreciation and amortization	—		—		(9,910)		(25)		(9,935)
Total costs and expenses	(1,058)		(87)		(15,980)		(20,944)		(38,069)

Income tax (expense) benefit	—		—		—		(2,219)		(2,219)
Segment profit (loss)	$	71,905	$	7,872	$	3,156	$	(46,860)	$	36,073

Total assets as of December 31, 2019	$	3,358,861	$	1,721,305	$	1,096,514	$	492,472	$	6,669,152


	Loans		Securities		Real Estate(1)		Corporate/Other(2)		Company Total

Six months ended June 30, 2020
Interest income	$	112,546	$	21,040	$	10	$	1,090	$	134,686
Interest expense	(16,602)		(14,554)		(19,993)		(68,678)		(119,827)
Net interest income (expense)	95,944		6,486		(19,983)		(67,588)		14,859
(Provision) benefit for loan losses	(25,855)		3		—		—		(25,852)
Net interest income (expense) after provision for loan losses	70,089		6,489		(19,983)		(67,588)		(10,993)

Operating lease income	—		—		50,101		—		50,101


Sale of loans, net	261		—		—		—		261
Realized gain (loss) on securities	—		(11,787)		—		—		(11,787)
Unrealized gain (loss) on equity securities	—		(132)		—		—		(132)
Unrealized gain (loss) on Agency interest-only securities	—		174		—		—		174
Realized gain on sale of real estate, net	—		—		10,528		—		10,528

Fee and other income	3,854		403		25		742		5,024
Net result from derivative transactions	(11,939)		(4,309)		—		—		(16,248)
Earnings (loss) from investment in unconsolidated joint ventures	—		—		912		—		912

Gain (loss) on extinguishment of debt	—		—		—		21,077		21,077
Total other income (loss)	(7,824)		(15,651)		61,566		21,819		59,910

Salaries and employee benefits	—		—		—		(24,023)		(24,023)
Operating expenses(3)	—		—		—		(12,018)		(12,018)
Real estate operating expenses	—		—		(13,981)				(13,981)

Fee expense	(2,664)		(133)		(618)		—		(3,415)
Depreciation and amortization	—		—		(19,775)		(50)		(19,825)
Total costs and expenses	(2,664)		(133)		(34,374)		(36,091)		(73,262)

Income tax (expense) benefit	—		—		—		5,091		5,091
Segment profit (loss)	$	59,601	$	(9,295)	$	7,209	$	(76,769)	$	(19,254)

Total assets as of June 30, 2020	$	2,991,959	$	1,506,713	$	1,091,129	$	1,019,749	$	6,609,550


	Loans		Securities		Real Estate(1)		Corporate/Other(2)		Company Total

Six months ended June 30, 2019
Interest income	$	142,947	$	28,329	$	15	$	498	$	171,789
Interest expense	(28,981)		(6,618)		(17,973)		(50,046)		(103,618)
Net interest income (expense)	113,966		21,711		(17,958)		(49,548)		68,171
(Provision) benefit for loan losses	(600)		—		—		—		(600)
Net interest income (expense) after provision for loan losses	113,366		21,711		(17,958)		(49,548)		67,571

Operating lease income	—		—		56,701		—		56,701


Sale of loans, net	27,342		—		—		—		27,342
Realized gain (loss) on securities	—		7,329		—		—		7,329
Unrealized gain (loss) on equity securities	—		1,088		—		—		1,088
Unrealized gain (loss) on Agency interest-only securities	—		22		—		—		22
Realized gain on sale of real estate, net	—		—		(1,119)		—		(1,119)
Impairment of real estate	—		—		(1,350)		—		(1,350)
Fee and other income	9,257		737		7		1,881		11,882
Net result from derivative transactions	(13,716)		(12,775)		—		—		(26,491)
Earnings (loss) from investment in unconsolidated joint ventures	—		—		2,522		—		2,522

Gain (loss) on extinguishment of debt	—		—		(1,070)		—		(1,070)
Total other income (loss)	22,883		(3,599)		55,691		1,881		76,856

Salaries and employee benefits	—		—		—		(38,481)		(38,481)
Operating expenses(3)	—		—		—		(11,413)		(11,413)
Real estate operating expenses	—		—		(11,506)		—		(11,506)

Fee expense	(2,252)		(187)		(456)		—		(2,895)
Depreciation and amortization	—		—		(20,112)		(50)		(20,162)
Total costs and expenses	(2,252)		(187)		(32,074)		(49,944)		(84,457)

Income tax (expense) benefit	—		—		—		634		634
Segment profit (loss)	$	133,997	$	17,925	$	5,659	$	(96,977)	$	60,604

Total assets as of December 31, 2019	$	3,358,861	$	1,721,305	$	1,096,514	$	492,472	$	6,669,152

(1)Includes the Company’s investment in unconsolidated joint ventures that held real estate of $48.9 million and $48.4 million as of June 30, 2020 and December 31, 2019, respectively.

(2)Corporate/Other represents all corporate level and unallocated items including any intercompany eliminations necessary to reconcile to consolidated Company totals. This segment also includes the Company’s investment in unconsolidated joint ventures and strategic investments that are not related to the other reportable segments above, including the Company’s investment in FHLB stock of $61.6 million and $61.6 million as of June 30, 2020 and December 31, 2019, respectively, the Company’s deferred tax asset (liability) of $(12.0) million and $(2.1) million as of June 30, 2020 and December 31, 2019, respectively, and the Company’s senior unsecured notes of $1.7 billion and $1.2 billion as of June 30, 2020 and December 31, 2019, respectively.

(3)Includes $4.0 million and $7.1 million of professional fees for the three and six months ended June 30, 2020, respectively. Includes $3.6 million and $6.1 million of professional fees for the three and six months ended June 30, 2019, respectively.

SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Abstract]

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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Reference 5: http://www.xbrl.org/2003/role/disclosureRef
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Reference 6: http://www.xbrl.org/2003/role/disclosureRef
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
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Reference 12: http://www.xbrl.org/2003/role/disclosureRef
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Reference 13: http://www.xbrl.org/2003/role/disclosureRef
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Reference 14: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

SUBSEQUENT EVENTS	6 Months Ended
SUBSEQUENT EVENTS	Jun. 30, 2020
Subsequent Events [Abstract]
SUBSEQUENT EVENTS	20. SUBSEQUENT EVENTS The Company has evaluated subsequent events through the issuance date of the financial statements and determined that no additional disclosure is necessary.

SIGNIFICANT ACCOUNTING POLICIES (Policies)	6 Months Ended
SIGNIFICANT ACCOUNTING POLICIES (Policies)	Jun. 30, 2020
Accounting Policies [Abstract]
Basis of Accounting and Principles of Consolidation	Basis of Accounting and Principles of Consolidation The accompanying consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). In the opinion of management, the unaudited financial information for the interim periods presented in this report reflects all normal and recurring adjustments necessary for a fair statement of results of operations, financial position and cash flows. The interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2019, which are included in the Annual Report, as certain disclosures that would substantially duplicate those contained in the audited consolidated financial statements have not been included in this interim report. Operating results for interim periods are not necessarily indicative of operating results for an entire fiscal year. The consolidated financial statements include the Company’s accounts and those of its subsidiaries which are majority-owned and/or controlled by the Company and variable interest entities for which the Company has determined itself to be the primary beneficiary, if any. All significant intercompany transactions and balances have been eliminated. Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 810 — Consolidation (“ASC 810”), provides guidance on the identification of entities for which control is achieved through means other than voting rights (“variable interest entities” or “VIEs”) and the determination of which business enterprise, if any, should consolidate the VIEs. Generally, the consideration of whether an entity is a VIE applies when either: (1) the equity investors (if any) lack one or more of the essential characteristics of a controlling financial interest; (2) the equity investment at risk is insufficient to finance that entity’s activities without additional subordinated financial support; or (3) the equity investors have voting rights that are not proportionate to their economic interests and the activities of the entity involve or are conducted on behalf of an investor with a disproportionately small voting interest. The Company consolidates VIEs in which it is considered to be the primary beneficiary. The primary beneficiary is the entity that has both of the following characteristics: (1) the power to direct the activities that, when taken together, most significantly impact the VIE’s performance; and (2) the obligation to absorb losses and right to receive the returns from the VIE that would be significant to the VIE.
Provision for Loan Losses	Provision for Loan Losses The provision for loan losses reflects the Company’s estimate of loan losses inherent in the loan portfolio as of the balance sheet date. The provision for loan losses includes a portfolio-based, current expected credit loss (“CECL”) component and an asset-specific component. In compliance with the new CECL reporting requirements, the Company has supplemented the existing credit monitoring and management processes with additional processes to support the calculation of the CECL reserves. As part of that effort, the Company has engaged a third-party service provider to provide market data and a credit loss model. The credit loss model is a forward-looking, econometric, commercial real estate (“CRE”) loss forecasting tool. It is comprised of a probability of default (“PD”) model and a loss given default (“LGD”) model that, layered together with user’s loan-level data, selected forward-looking macroeconomic variables, and pool-level mean loss rates, produces life of loan expected losses (“EL”) at the loan and portfolio level. The asset-specific reserve component relates to reserves for losses on individually impaired loans. The Company evaluates each loan for impairment at least quarterly. Impairment occurs when it is deemed probable that the Company will not be able to collect all amounts due according to the contractual terms of the loan. If the loan is considered to be impaired, an allowance is recorded to reduce the carrying value of the loan to the present value of the expected future cash flows discounted at the loan’s effective rate or the fair value of the collateral, less the estimated costs to sell, if recovery of the Company’s investment is expected solely from the collateral. The Company generally will use the direct capitalization rate valuation methodology or the sales comparison approach to estimate the fair value of the collateral for such loans and in certain cases will obtain external appraisals. Determining fair value of the collateral may take into account a number of assumptions including, but not limited to, cash flow projections, market capitalization rates, discount rates and data regarding recent comparable sales of similar properties. Such assumptions are generally based on current market conditions and are subject to economic and market uncertainties. The Company’s loans are typically collateralized by real estate directly or indirectly. As a result, the Company regularly evaluates the extent and impact of any credit deterioration associated with the performance and/or value of the underlying collateral property as well as the financial and operating capability of the borrower/sponsor on a loan-by-loan basis. Specifically, a property’s operating results and any cash reserves are analyzed and used to assess (i) whether cash flow from operations is sufficient to cover the debt service requirements currently and into the future, (ii) the ability of the borrower to refinance the loan at maturity, and/or (iii) the property’s liquidation value. The Company also evaluates the financial wherewithal of any loan guarantors as well as the borrower’s competency in managing and operating the properties. In addition, the Company considers the overall economic environment, real estate sector, and geographic submarket in which the collateral property is located. Such impairment analyses are completed and reviewed by asset management and underwriting personnel, who utilize various data sources, including (i) periodic financial data such as property occupancy, tenant profile, rental rates, operating expenses, the borrowers’ business plan, and capitalization and discount rates, (ii) site inspections, and (iii) current credit spreads and other market data and ultimately presented to management for approval. A loan is also considered impaired if its terms are modified in a troubled debt restructuring (“TDR”). A TDR occurs when a concession is granted and the debtor is experiencing financial difficulties. Impairments on TDR loans are generally measured based on the present value of expected future cash flows discounted at the effective interest rate of the original loans. Generally, when granting concessions, the Company will seek to protect its position by requiring incremental pay downs, additional collateral or guarantees and, in some cases, lookback features or equity interests to offset concessions granted should conditions impacting the loan improve. The Company’s determination of credit losses is impacted by TDRs whereby loans that have gone through TDRs are considered impaired, assessed for specific reserves, and are not included in the Company’s assessment of the CECL reserve. Loans previously restructured under TDRs that subsequently default are reassessed to incorporate the Company’s current assumptions on expected cash flows and additional provision expense is recorded to the extent necessary. The Company designates non-accrual loans at such time as (i) loan payments become 90-days past due or (ii) in the opinion of the Company, it is probable the Company will be unable to collect all amounts due according to the contractual terms of the loan. Income recognition will be suspended when a loan is designated non-accrual and resumed only when the suspended loan becomes contractually current and performance is demonstrated to have resumed. Any interest received for loans on non-accrual status will be applied as a reduction to the unpaid principal balance. A loan will be written off when it is no longer realizable and legally discharged.
Recent Accounting Pronouncements	Recently Adopted Accounting Pronouncements In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13 Financial Instruments - Credit Losses - Measurement of Credit Losses on Financial Instruments (Topic 326) (“ASU 2016-13”) and in April 2019, the FASB issued ASU 2019-04 Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments (“ASU 2019-04”), collectively, the “CECL Standard.” These updates change how entities measure potential credit losses for most financial assets and certain other instruments that are not measured at fair value. The CECL Standard replaced the “incurred loss” approach under previous guidance with an “expected loss” model for instruments measured at amortized cost. The net carrying value of an asset under the CECL Standard is intended to represent the amount expected to be collected on such asset and requires entities to deduct allowances for potential losses on held-to-maturity debt securities. The Company will continue to record asset-specific reserves consistent with our existing accounting policy. In addition, the Company will now record a general reserve in accordance with the CECL Standard on the remainder of the loan portfolio (“CECL Reserve”). At adoption, on January 1, 2020, the Company recorded a CECL Reserve of $11.6 million, which equated to 0.36% of $3.2 billion carrying value of its held for investment loan portfolio. This reserve excluded three loans that previously had an aggregate of $14.7 million of asset-specific reserves and a carrying value of $39.8 million as of January 1, 2020. Upon adoption, the aggregated CECL Reserve reduced total shareholder’s equity by $5.8 million (or approximately $0.05 of book value per share of common stock). In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement, (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement, (“ASU 2018-13”). ASU 2018-13 eliminates, adds and modifies certain disclosure requirements for fair value measurements as part of its disclosure framework project. The standard is effective for all entities for financial statements issued for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The adoption of ASU 2018-13 had no material impact on the Company’s consolidated financial statements. In October 2018, the FASB issued ASU 2018-17, Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities, (“ASU 2018-17”). ASU 2018-17 requires reporting entities to consider indirect interests held through related parties under common control on a proportional basis rather than as the equivalent of a direct interest in its entirety for determining whether a decision-making fee is a variable interest. The standard is effective for all entities for financial statements issued for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted. Entities are required to apply the amendments in ASU 2018-17 retrospectively with a cumulative-effect adjustment to retained earnings at the beginning of the earliest period presented. The adoption of ASU 2018-17 had no material impact on the Company’s consolidated financial statements. In April 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, (“ASU 2019-04”). ASU 2019-04 clarifies and improves areas of guidance related to the recently issued standards on credit losses (ASU 2016-13), hedging (ASU 2017-12), and recognition and measurement of financial instruments (ASU 2016-01). The amendments generally have the same effective dates as their related standards. If already adopted, the amendments of ASU 2016-01 and ASU 2016-13 are effective for fiscal years beginning after December 15, 2019 and the amendments of ASU 2017-12 are effective as of the beginning of the Company’s next annual reporting period; early adoption is permitted. The Company previously adopted ASU 2016-01. The adoption of ASU 2019-04 had no material impact on the Company’s consolidated financial statements. In March 2020, the FASB issued ASU 2020-03, Codification Improvements to Financial Instruments, (“ASU 2020-03”). ASU 2020-03 improves various financial instruments topics, including the CECL Standard. ASU 2020-03 includes seven different issues that describe the areas of improvement and the related amendments to GAAP, intended to make the standards easier to understand and apply by eliminating inconsistencies and providing clarifications. The amendments related to Issue 1, Issue 2, Issue 4 and Issue 5 were effective upon issuance of ASU 2020-03. The amendments related to Issue 3, Issue 6 and Issue 7 were effective for the Company beginning on January 1, 2020. The adoption of ASU 2020-03 had no material impact on the Company’s consolidated financial statements. In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, (“ASU 2020-04”). ASU 2020-04 provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform. ASU 2020-04 is effective upon issuance of ASU 2020-04 for contract modifications and hedging relationships on a prospective basis. While the Company is currently assessing the impact of ASU 2020-04, the Company does not expect the adoption to have a material impact on its consolidated financial statements. Recent Accounting Pronouncements Pending Adoption In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 815), (“ASU 2019-12”). ASU 2019-12 simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. ASU 2019-12 also improves the consistent application of, and simplifies, GAAP for other areas of Topic 740 by clarifying and amending existing guidance. The standard is effective for all entities for financial statements issued for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. Early adoption is permitted. The Company does not expect the adoption of ASU 2019-12 to have a material impact on its consolidated financial statements. Any new accounting standards not disclosed above that have been issued or proposed by FASB and that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption.

MORTGAGE LOAN RECEIVABLES (Tables)

6 Months Ended

Jun. 30, 2020

Schedule of mortgage loan receivables


	Outstanding Face Amount		Carrying Value		Weighted Average Yield (1)		Remaining Maturity (years)

Mortgage loan receivables held for investment, net, at amortized cost:
Mortgage loans held by consolidated subsidiaries:
First mortgage loans	$	2,848,829	$	2,832,610	6.65	%	1.15
Mezzanine loans	122,793		122,474		10.84	%	2.91
Total mortgage loans held by consolidated subsidiaries	2,971,622		2,955,084		6.82	%	1.22


Allowance for loan losses	N/A		(49,102)
Total mortgage loan receivables held for investment, net, at amortized cost	2,971,622		2,905,982
Mortgage loan receivables held for sale:
First mortgage loans	86,456		85,977		3.94	%	9.70
Total	$	3,058,078	$	2,991,959	6.85	%	1.48

(1)June 30, 2020 LIBOR rates are used to calculate weighted average yield for floating rate loans.


	Outstanding Face Amount		Carrying Value		Weighted Average Yield (1)		Remaining Maturity (years)

Mortgage loan receivables held for investment, net, at amortized cost:
Mortgage loans held by consolidated subsidiaries:
First mortgage loans	$	3,147,275	$	3,127,173	6.77	%	1.35
Mezzanine loans	130,322		129,863		10.97	%	3.26
Total mortgage loans held by consolidated subsidiaries	3,277,597		3,257,036		6.94	%	1.43


Allowance for loan losses	N/A		(20,500)
Total mortgage loan receivables held for investment, net, at amortized cost	3,277,597		3,236,536
Mortgage loan receivables held for sale:
First mortgage loans	122,748		122,325		4.20	%	9.99
Total	$	3,400,345	$	3,358,861	6.88	%	1.75

(1)December 31, 2019 LIBOR rates are used to calculate weighted average yield for floating rate loans.

Summary of mortgage loan receivables by loan type

For the six months ended June 30, 2020 and 2019, the activity in our loan portfolio was as follows ($ in thousands):


	Mortgage loan receivables held for investment, net, at amortized cost:
	Mortgage loans held by consolidated subsidiaries		Provision expense for current expected credit loss		Mortgage loan receivables held for sale

Balance, December 31, 2019	$	3,257,036	$	(20,500)	$	122,325
Origination of mortgage loan receivables	334,347		—		212,845

Repayment of mortgage loan receivables	(446,080)		—		(292)
Proceeds (losses) from sales of mortgage loan receivables	(165,364)		—		(255,827)
Non-cash disposition of loans via foreclosure(1)	(27,107)		—		—
Sale of loans, net	(6,665)		—		6,926

Accretion/amortization of discount, premium and other fees	8,917		—		—
Release of asset-specific loan loss provision via foreclosure(1)	—		2,000
Provision expense for current expected credit loss (implementation impact)(2)	—		(4,964)
Provision expense for current expected credit loss, net (impact to earnings)(2)	—		(17,638)
Additional asset-specific reserve	—		(8,000)		—
Balance, June 30, 2020	$	2,955,084	$	(49,102)	$	85,977

(1)Refer to Note 5 Real Estate and Related Lease Intangibles, Net for further detail on foreclosure of real estate.

(2)During the six months ended June 30, 2020, the initial impact of the implementation of the CECL accounting standard as of January 1, 2020 is recorded against retained earnings. Subsequent remeasurement thereafter, including the period to date change for the six months ended June 30, 2020, is accounted for as provision expense for current expected credit loss in the consolidated statements of income.


	Mortgage loan receivables held for investment, net, at amortized cost:
	Mortgage loans held by consolidated subsidiaries		Mortgage loans transferred but not considered sold		Provision for loan losses		Mortgage loan receivables held for sale

Balance, December 31, 2018	$	3,318,390	$	—	$	(17,900)	$	182,439
Origination of mortgage loan receivables	484,496		—		—		333,342

Repayment of mortgage loan receivables	(693,323)		—		—		(497)
Proceeds from sales of mortgage loan receivables	—		(15,504)		—		(415,145)

Sale of loans, net	—		—		—		27,342
Transfer between held for investment and held for sale(1)	—		15,504		—		(15,504)
Accretion/amortization of discount, premium and other fees	10,294		—		—		—
Provision for/(release of) loan loss reserves	—		—		(600)		—
Balance, June 30, 2019	$	3,119,857	$	—	$	(18,500)	$	111,977

(1)We sell certain loans into securitizations; however, for a transfer of financial assets to be considered a sale, the transfer must meet the sale criteria of ASC 860 under which the Company must surrender control over the transferred assets which must qualify as recognized financial assets at the time of transfer. The assets must be isolated from the Company, even in bankruptcy or other receivership, the purchaser must have the right to pledge or sell the assets transferred and the Company may not have an option or obligation to reacquire the assets. If the sale criteria are not met, the transfer is considered to be a secured borrowing, the assets remain on the Company’s consolidated balance sheets and the sale proceeds are recognized as a liability. During the three months ended March 31, 2019, the Company reclassified from mortgage loan receivables held for sale to mortgage loans transferred but not considered sold, at amortized cost, one loan with an outstanding face amount of $15.4 million, a book value of $15.5 million (fair value at the date of reclassification) and a remaining maturity of 9.8 years, which was sold to the WFCM 2019-C49 securitization trust. Subsequent to March 31, 2019, the controlling loan interest was sold to the UBS 2019-C16 securitization trust, and as a result, the loan previously sold during the three months ended March 31, 2019 was accounted for as a sale during the six months ended June 30, 2019.

Schedule of provision for loan losses

Allowance for Loan Losses and Non-Accrual Status ($ in thousands)


	Three Months Ended June 30,								Six Months Ended June 30,
	2020			2019			2020		2019

Allowance for loan losses at beginning of period	$	49,457		$	18,200		$	20,500	$	17,900
Provision expense for current expected credit loss (implementation impact)	—			—			4,964		—
Provision expense for current expected credit loss, net (impact to earnings)	(355)			300			17,638		600
Additional asset-specific reserve	—			—			8,000		—
Foreclosure of loans subject to asset-specific reserve	—			—			(2,000)		—


Allowance for loan losses at end of period	$	49,102		$	18,500		$	49,102	$	18,500

	June 30, 2020			December 31, 2019

Principal balance of loans on non-accrual status	$	185,896	(1)	$	98,725	(2)

(1)Represents two of the Company’s loans, which were originated simultaneously as part of a single transaction and had a combined carrying value of $26.9 million, two loans with a combined carrying value of $45.9 million, one loan with a carrying value of $61.5 million, one loan with a carrying value of $4.1 million, one loan with a carrying value of $8.0 million and one loan with a carrying value of $39.5 million, as further discussed below.

(2)Represents two of the Company’s loans, which were originated simultaneously as part of a single transaction and had a combined carrying value of $26.9 million, one loan with a carrying value of $10.4 million and one loan with a carrying value of $61.5 million, as further discussed below.

Schedule of individually impaired loans

The Company has concluded that none of its loans, other than the four loans discussed below, are individually impaired as of June 30, 2020.

Loan Portfolio by Geographic Region, Property Type and Vintage ($ in thousands)


	Amortized Cost
Geographic Region

Northeast	$	785,000
Southwest	588,046
Midwest	585,505
South	512,314
West	407,286
Subtotal loans	2,878,151
Individually impaired loans(1)	76,933
Total loans	$	2,955,084

Management’s method for monitoring credit is the performance of a loan. A loan is impaired or not impaired based on the expectation that all amounts contractually due under a loan will be collected when due. The primary credit quality indicator management utilizes to assess its current expected credit loss reserve is by viewing Ladder’s loan portfolio by collateral type. The following table summarizes the assessed amortized cost of the loan portfolio by property type ($ in thousands).


	Vintage
Property Type	2020		2019		2018		2017		2016 and Earlier		Total

Multifamily	$	65,228	$	323,178	$	147,460	$	31,872	$	11,772	$	579,510
Office	51,658		216,946		388,721		160,288		52,086		869,699
Hospitality	—		83,018		143,681		67,446		123,630		417,775
Mixed Use	52,515		101,436		5,092		47,849		—		206,892
Retail	—		141,842		25,029		—		65,823		232,694
Other	57,528		130,025		82,353		—		—		269,906
Industrial	51,964		114,987		—		—		6,476		173,427
Manufactured Housing	4,545		56,918		11,702		—		3,970		77,135
Self-Storage	—		35,936		15,177		—		—		51,113
Subtotal loans	283,438		1,204,286		819,215		307,455		263,757		2,878,151
Individually Impaired loans (1)	—		—		4,143				72,790		76,933
Total loans	$	283,438	$	1,204,286	$	823,358	$	307,455	$	336,547	$	2,955,084

(1)Included in individually impaired loans are two loans, which were originated in 2016 simultaneously as part of a single transaction with a combined amortized cost of $26.9 million, collateralized by a mixed use property located in the Northeast region, one loan, which was originated in 2016 and subsequently restructured into two loans in 2018, with a combined amortized cost of $45.9 million, collateralized by a mixed use property located in the Northeast region, and one loan, originated in 2018, with a amortized cost of $4.1 million, collateralized by a hotel located in the Midwest region. The above individually impaired loans’ amortized cost basis excludes asset-specific provisions totaling $20.7 million.

REAL ESTATE SECURITIES (Tables)

6 Months Ended

Jun. 30, 2020

Investments, Debt and Equity Securities [Abstract]

Summary of securities which are classified as available-for-sale

The following is a summary of the Company’s securities at June 30, 2020 and December 31, 2019 ($ in thousands):

June 30, 2020


					Gross Unrealized									Weighted Average
Asset Type	Outstanding Face Amount		Amortized Cost Basis/Purchase Price		Gains		Losses		Carrying Value			# of Securities	Rating (1)	Coupon %		Yield %		Remaining Duration (years)

CMBS(2)	$	1,496,090	$	1,495,892	$	212	$	(48,766)	$	1,447,338	(3)	49	AAA	1.51	%	1.57	%	2.27
CMBS interest-only(2)(4)	1,535,739		25,026		488		(4)		25,510		(5)	15	AAA	0.45	%	2.83	%	2.34
GNMA interest-only(4)(6)	93,464		1,335		204		(161)		1,378			14	AA+	0.45	%	4.21	%	3.18
Agency securities(2)	610		619		17		—		636			2	AA+	2.61	%	1.68	%	1.56
GNMA permanent securities(2)	30,853		31,006		864		—		31,870			6	AA+	3.89	%	3.50	%	2.41

Total debt securities	$	3,156,756	$	1,553,878	$	1,785	$	(48,931)	$	1,506,732		86		0.98	%	1.63	%	2.27

Provision for current expected credit losses	N/A		—		—		(19)		(19)
Total real estate securities	$	3,156,756	$	1,553,878	$	1,785	$	(48,950)	$	1,506,713		86

(1)Represents the weighted average of the ratings of all securities in each asset type, expressed as an S&P equivalent rating. For each security rated by multiple rating agencies, the highest rating is used. Ratings provided were determined by third-party rating agencies as of a particular date, may not be current and are subject to change (including the assignment of a “negative outlook” or “credit watch”) at any time.

(2)CMBS, CMBS interest-only securities, Agency securities, GNMA permanent securities and corporate bonds are classified as available-for-sale and reported at fair value with changes in fair value recorded in the current period in other comprehensive income.

(3)Includes $11.1 million of restricted securities which are designated as risk retention securities under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, (the “Dodd-Frank Act”) and are therefore subject to transfer restrictions over the term of the securitization trust and are classified as held-to-maturity and reported at amortized cost.

(4)The amounts presented represent the principal amount of the mortgage loans outstanding in the pool in which the interest-only securities participate.

(5)Includes $0.7 million of restricted securities which are designated as risk retention securities under the Dodd-Frank Act and are therefore subject to transfer restrictions over the term of the securitization trust and are classified as held-to-maturity and reported at amortized cost.

(6)Agency interest-only securities are recorded at fair value with changes in fair value recorded in current period earnings. The Company’s Agency interest-only securities are considered to be hybrid financial instruments that contain embedded derivatives. As a result, the Company has elected to account for them as hybrid instruments in their entirety at fair value with changes in fair value recognized in unrealized gain (loss) on Agency interest-only securities in the consolidated statements of income in accordance with ASC 815.

(7)The Company has elected to account for equity securities at fair value with changes in fair value recorded in current period earnings.

December 31, 2019


					Gross Unrealized									Weighted Average
Asset Type	Outstanding Face Amount		Amortized Cost Basis		Gains		Losses		Carrying Value			# of Securities	Rating (1)	Coupon %		Yield %		Remaining Duration (years)

CMBS(2)	$	1,640,597	$	1,640,905	$	4,337	$	(920)	$	1,644,322	(3)	125	AAA	3.06	%	3.08	%	2.41
CMBS interest-only(2)(4)	1,559,160		28,553		630		(37)		29,146		(5)	15	AAA	0.60	%	3.04	%	2.53
GNMA interest-only(4)(6)	109,783		1,982		123		(254)		1,851			11	AA+	0.49	%	4.59	%	2.77
Agency securities(2)	629		640		1		(4)		637			2	AA+	2.65	%	1.73	%	1.83
GNMA permanent securities(2)	31,461		31,681		688		—		32,369			6	AA+	3.91	%	3.17	%	1.93

Total debt securities	$	3,341,630	$	1,703,761	$	5,779	$	(1,215)	$	1,708,325		159		1.84	%	3.06	%	2.39
Equity securities(7)	N/A		12,848		292		(160)		12,980			2	N/A	N/A		N/A		N/A
Total real estate securities	$	3,341,630	$	1,716,609	$	6,071	$	(1,375)	$	1,721,305		161

(1)Represents the weighted average of the ratings of all securities in each asset type, expressed as an S&P equivalent rating. For each security rated by multiple rating agencies, the highest rating is used. Ratings provided were determined by third-party rating agencies as of a particular date, may not be current and are subject to change (including the assignment of a “negative outlook” or “credit watch”) at any time.

(2)CMBS, CMBS interest-only securities, Agency securities, GNMA permanent securities and corporate bonds are classified as available-for-sale and reported at fair value with changes in fair value recorded in the current period in other comprehensive income.

(3)Includes $11.6 million of restricted securities which are designated as risk retention securities under the Dodd-Frank Act and are therefore subject to transfer restrictions over the term of the securitization trust and are classified as held-to-maturity and reported at amortized cost.

(4)The amounts presented represent the principal amount of the mortgage loans outstanding in the pool in which the interest-only securities participate.

(5)Includes $0.8 million of restricted securities which are designated as risk retention securities under the Dodd-Frank Act and are therefore subject to transfer restrictions over the term of the securitization trust and are classified as held-to-maturity and reported at amortized cost.

(6)Agency interest-only securities are recorded at fair value with changes in fair value recorded in current period earnings. The Company’s Agency interest-only securities are considered to be hybrid financial instruments that contain embedded derivatives. As a result, the Company accounts for them as hybrid instruments in their entirety at fair value with changes in fair value recognized in unrealized gain (loss) on Agency interest-only securities in the consolidated statements of income in accordance with ASC 815.

(7)The Company has elected to account for equity securities at fair value with changes in fair value recorded in current period earnings.

Schedule of fair value of the Company's securities by remaining maturity based upon expected cash flows

The following is a breakdown of the carrying value of the Company’s debt securities by remaining maturity based upon expected cash flows at June 30, 2020 and December 31, 2019 ($ in thousands):

June 30, 2020


Asset Type	Within 1 year		1-5 years		5-10 years		After 10 years		Total

CMBS	$	185,672	$	1,212,532	$	49,134	$	—	$	1,447,338
CMBS interest-only	920		24,590		—		—		25,510
GNMA interest-only	70		1,028		276		4		1,378
Agency securities	—		636		—		—		636
GNMA permanent securities	231		31,639		—		—		31,870


Total debt securities	$	186,893	$	1,270,425	$	49,410	$	4	$	1,506,732

December 31, 2019


Asset Type	Within 1 year		1-5 years		5-10 years		After 10 years		Total

CMBS	$	177,193	$	1,389,392	$	77,737	$	—	$	1,644,322
CMBS interest-only	1,439		27,707		—		—		29,146
GNMA interest-only	91		1,504		256		—		1,851
Agency securities	—		637		—		—		637
GNMA permanent securities	416		31,953		—		—		32,369

Total debt securities	$	179,139	$	1,451,193	$	77,993	$	—	$	1,708,325

REAL ESTATE AND RELATED LEASE INTANGIBLES, NET (Tables)

6 Months Ended

Jun. 30, 2020

Real Estate [Abstract]

Schedule of real estate properties by category

The following tables present additional detail related to our real estate portfolio, net, including foreclosed properties ($ in thousands):


	June 30, 2020		December 31, 2019

Land	$	228,111	$	209,955
Building	871,585		883,005
In-place leases and other intangibles	159,049		161,203
Less: Accumulated depreciation and amortization	(216,535)		(206,082)

Real estate and related lease intangibles, net	$	1,042,210	$	1,048,081

Below market lease intangibles, net (other liabilities)	$	(38,125)	$	(39,067)

Schedule of depreciation and amortization expense recorded

The following table presents depreciation and amortization expense on real estate recorded by the Company ($ in thousands):


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019

Depreciation expense(1)	$	8,110	$	7,697	$	16,383	$	15,382
Amortization expense	1,681		2,213		3,392		4,730
Total real estate depreciation and amortization expense	$	9,791	$	9,910	$	19,775	$	20,112

(1)Depreciation expense on the consolidated statements of income also includes $25 thousand and $50 thousand of depreciation on corporate fixed assets for the three and six months ended June 30, 2020, respectively. Depreciation expense on the consolidated statements of income also includes $25 thousand and $50 thousand for the three and six months ended June 30, 2019, respectively.

Schedule of lease intangible assets

The Company’s intangible assets are comprised of in-place leases, above market leases and other intangibles. The following tables present additional detail related to our intangible assets ($ in thousands):


	June 30, 2020		December 31, 2019

Gross intangible assets(1)	$	159,049	$	161,203
Accumulated amortization	63,089		62,773
Net intangible assets	$	95,960	$	98,430

(1)Includes $4.4 million and $4.5 million of unamortized above market lease intangibles which are included in real estate and related lease intangibles, net on the consolidated balance sheets as of June 30, 2020 and December 31, 2019, respectively.

The following table presents increases/reductions in operating lease income recorded by the Company ($ in thousands):


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019

Reduction in operating lease income for amortization of above market lease intangibles acquired	$	(92)	$	(208)	$	(183)	$	(633)
Increase in operating lease income for amortization of below market lease intangibles acquired	619		461		1,371		1,030

Schedule of expected amortization expense related to the acquired in-place lease intangibles, for property owned

The following table presents expected adjustment to operating lease income and expected amortization expense during the next five years and thereafter related to the above and below market leases and acquired in-place lease and other intangibles for property owned as of June 30, 2020 ($ in thousands):


Period Ending December 31,	Adjustment to Operating Lease Income		Amortization Expense

2020 (last 6 months)	$	625	$	2,956
2021	1,070		5,504
2022	1,070		5,504
2023	1,070		5,504
2024	1,070		5,504
Thereafter	28,867		66,590
Total	$	33,772	$	91,562

Schedule of contractual future minimum rent under leases

The following is a schedule of non-cancellable, contractual, future minimum rent under leases (excluding property operating expenses paid directly by tenant under net leases) at June 30, 2020 ($ in thousands):


Period Ending December 31,	Amount

2020 (last 6 months)	$	43,163
2021	73,091
2022	66,145
2023	65,377
2024	64,412
Thereafter	507,659
Total	$	819,847

Schedule of real estate properties acquired

During the six months ended June 30, 2020, the Company acquired the following properties ($ in thousands):

Acquisition Date

Type

Primary Location(s)

Purchase Price/Fair Value on the Date of Foreclosure

Ownership Interest (1)

Purchases of real estate

Aggregate purchases of net leased real estate

$

6,239

100.0%

Real estate acquired via foreclosure

March 2020

Diversified

Los Angeles, CA

21,535

100.0%

June 2020

Diversified

Winston Salem, NC

3,900

100.0%

Total real estate acquired via foreclosure

25,435

Total real estate acquisitions

$

31,674

(1)Properties were consolidated as of acquisition date.

The Company allocates purchase consideration based on relative fair values, and real estate acquisition costs are capitalized as a component of the cost of the assets acquired for asset acquisitions. During the six months ended June 30, 2020, all acquisitions were determined to be asset acquisitions.

The purchase prices were allocated to the asset acquisitions during the six months ended June 30, 2020, as follows ($ in thousands):


	Purchase Price Allocation

Land	$	23,524
Building	7,244
Intangibles	1,201
Below Market Lease Intangibles	(295)
Total purchase price	$	31,674

The weighted average amortization period for intangible assets acquired during the six months ended June 30, 2020 was 39.8 years. The Company recorded $0.1 million and $0.2 million in revenues from its 2020 acquisitions for the three and six months ended June 30, 2020, respectively, which is included in its consolidated statements of income. The Company recorded $0.1 million and $47.6 thousand in earnings (losses) from its 2020 acquisitions for the three and six months ended June 30, 2020, respectively, which is included in its consolidated statements of income.

During the six months ended June 30, 2019, the Company acquired the following properties ($ in thousands):

Acquisition Date

Type

Primary Location(s)

Purchase Price/Fair Value on the Date of Foreclosure

Ownership Interest (1)

Purchases of real estate

Aggregate purchases of net leased real estate

$

5,071

100.0%

Real estate acquired via foreclosure

February 2019

Diversified

Omaha, NE

18,200

100.0%

Total real estate acquired via foreclosure

18,200

Total real estate acquisitions

$

23,271

(1)Properties were consolidated as of acquisition date.

The purchase prices were allocated to the asset acquisitions during the six months ended June 30, 2019, as follows ($ in thousands):


	Purchase Price Allocation

Land	$	3,789
Building	18,885
Intangibles	854
Below Market Lease Intangibles	(257)
Total purchase price	$	23,271

Schedule of properties sold

The Company sold the following properties during the six months ended June 30, 2020 ($ in thousands):


Sales Date	Type	Primary Location(s)	Net Sales Proceeds		Net Book Value		Realized Gain/(Loss)		Properties	Units Sold	Units Remaining

Various	Condominium	Miami, FL	$	931	$	924	$	7	—	3	3
March 2020	Diversified	Richmond, VA	22,526		14,829		7,697		7	—	—
March 2020	Diversified	Richmond, VA	6,933		4,109		2,824		1	—	—



Totals			$	30,390	$	19,862	$	10,528

Realized gain on the sale of real estate, net on the consolidated statements of income also includes $0.1 million of realized loss on the disposal of fixed assets for the six months ended June 30, 2020

The Company sold the following properties during the six months ended June 30, 2019 ($ in thousands):


Sales Date	Type	Primary Location(s)	Net Sales Proceeds		Net Book Value		Realized Gain/(Loss)		Properties	Units Sold	Units Remaining

N/A	Condominium	Las Vegas, NV	$	—	$	—	$	—	—	—	1
Various	Condominium	Miami, FL	3,917		3,550		367		—	13	9
April 2019	Diversified	Wayne, NJ	1,729		4,799		(3,070)		1	—	—
May 2019	Diversified	Grand Rapids, MI	10,019		8,254		1,765		1	—	—


Totals			$	15,665	$	16,603	$	(938)