It is common to see new insurance companies formed in the aftermath of natural disasters. Stepping sideways into the real estate lending market, it is not surprising to see that a credit disaster has given rise to a new lending institution.
Ladder Capital Finance announced last month its launch, backed by two private equity firms and led by a team of managers, one of whom got a front-row seat to the demise of another lending institution.
The new firm is poised to bring badly needed liquidity to a market that is all but devoid of active lenders. That said, it is unclear to what extent Ladder Capital will fund new deals, as opposed to merely feasting on the discounted debt already in the market.
Ladder Capital, which hopes to employ 25 people within a year, says it will purchase and originate commercial real estate mortgages, including commercial mortgage-backed securities. An announcement from the firm noted “opportunities resulting from the current lack of liquidity and the long term structural changes occurring in the commercial real estate financing market”.
Its leadership team knows whereof they speak. The New York startup has as its chairman Alan Fish, who was named as the chief executive officer of Washington Mutual on 8 September, forcing out Kerry Killinger, who had been at the helm of WaMu since 1990. Seventeen days later, the home mortgage lender was dramatically taken over by JPMorgan, spelling the end of one of America's largest financial institutions.
Fishman is also the former chairman of mortgage broker Meridian Capital Group, which has an interest in the new concern.
Ladder Capital's chief executive officer is Brian Harris, who was head of global commercial real estate at UBS from 1999 to 2006.
The firm is being backed with a $1 billion commitment from TowerBrook Capital Partners and GI Partners. The latter firm, based in Menlo Park, California, previously backed Digital Realty Trust, a real estate investment trust that was taken public in 2004.
For New York- and London-based TowerBrook, a spinout from Soros Private Equity, this will be its first investment in the financial services space. Its partners must be high-fiving each other about not having gotten into the game a moment earlier.