Deals

Ladder Capital files $400m debt IPO

The flow of private real estate firms launching public debt REITs has increased again, after the New York-based firm filed an IPO for Ladder Capital Realty Finance. The vehicle will primarily originate first mortgages and target some CMBS, B-notes and mezzanine loans.

-

Ladder Capital has become the latest private real estate manager to file an IPO for a debt REIT, this time hoping to raise $400 million to target distressed whole loan mortgages.

Ladder Capital Realty Finance (LCRF) will primarily target first mortgage originations as well as the purchase of and senior participation in fixed and floating first mortgage loans.

According to regulatory filings, LCRF could also originate and acquire CMBS in the short-term to take advantage of the US government’s Term Asset Backed Securities Loan Facility (TALF). The firm said it might also invest in some B-note and mezzanine loans, and consider loans to holders of commercial real estate first mortgage liens.

LCRF will seek to register as a public REIT and will be led by Ladder’s management team, including chief executive officer Brian Harris. In the space of one month, Apollo Global Management, Colony Capital and Starwood Capital have all filed IPOs to raise a total of $1.6 billion in equity for their debt REITs.

Ladder was founded last October with the backing of private equity firms TowerBrook Capital Partners, GI Partners and Meridian Capital Group.

Since its inception last October, Ladder has raised $611.6 million in capital commitments from investors, including TowerBrook, GI and Meridian, and invested $428 million of equity to 30 June, 2009, the regulatory filings show. It has $183.5 million of undrawn capital commitments remaining.

The firm revealed it had also agreed to buy Florida bank, FirstCity Bank of Commerce, earlier this month subject to stockholder and regulatory approvals. The deal is expected to close by the end of the year and will see the bank renamed Ladder Capital Bank.

With more than $1.8 trillion of commercial real estate loans set to mature between 2009 and 2012, Ladder said there was an “unprecedented market opportunity for well capitalised commercial real estate lenders to originate attractively priced loans”.