Ladder Capital Corp has announced that it has entered into a strategic financing arrangement with Koch Real Estate Investments, LLC, an affiliate of Koch Industries, under which Koch will provide Ladder with approximately $206.4 million in senior secured financing (the Koch Facility) to fund transitional and land loans. And Ladder also announced the completion of a private CLO with Goldman Sachs Bank USA, which generated $310.2 million of gross proceeds to Ladder.
And as part of the strategic financing agreement, Koch has the right to make a $32 million equity investment in the Ladder at any time prior to December 31, 2020. Ladder also expects that any such investment would additionally benefit Ladder’s liquidity position.
The completion of the private CLO with Goldman generated $310.2 million of gross proceeds to Ladder, financing $481.3 million of loans at a 64.5% advance rate on a matched term (non-mark to market and non-recourse basis).
Ladder will retain a 35.5% subordinate and controlling interest in the collateral — which affords the company broad discretion in managing these loans in light of the COVID-19 pandemic and preserving or increasing their value. And 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.
Moelis & Company acted as financial advisor to Ladder in connection with the Koch Facility.
“Over the last several months, Ladder has taken decisive action to enhance our liquidity and ensure we have the financial flexibility to manage through this challenging period and continue growing our business. Our asset values have held up well and we’ve enjoyed strong support from our financing partners. The partnership with Koch is a testament to our hard work, and the strength and resiliency of the platform we have built. The new financings position us to capitalize on attractive investment opportunities, particularly as market conditions normalize.” said Brian Harris, Founder and Chief Executive Officer of Ladder.
“We believe Ladder is one of the premier commercial real estate direct origination platforms in the United States. We’re pleased to back them in this strategic financing and we envision working together to capitalize on other great investment opportunities in the real estate space as the country and the economy begin to stabilize,” added Jake Francis, President of Koch Real Estate Investments.