Fitch Rates Ladder's $300MM Unsecured Notes 'BB'

Fitch Ratings has assigned a 'BB' rating to the $300 million senior unsecured notes issued by Ladder Capital Finance Holdings LLLP and Ladder Capital Finance Corporation (collectively, Ladder), subsidiaries of Ladder Capital Corp (NYSE:LADR). The notes have a coupon of 5.875% and will mature on Aug. 1, 2021. The notes are callable, in whole or part, at any time on or after Aug. 1, 2017 at the issuer's option.

KEY RATING DRIVERS

The notes rank equally with Ladder's other unsecured debt outstanding, and therefore the ratings have been equalized with Ladder's existing senior unsecured debt rating of 'BB' and its Issuer Default Rating of 'BB'.

Fitch does not expect there to be a material impact on the company's leverage levels as a result of the issuance, as proceeds from the issuance will be used to repay certain of Ladder's outstanding debt borrowings and for general corporate purposes.

Leverage, as measured by debt to tangible equity, was 1.4x at March 31, 2014, and is well below management's target of 2.0x - 3.0x. Unsecured debt on a pro forma basis increases to 28% of total debt, from 17% at 1Q'14, which is viewed favorably.

Ladder's ratings reflect its conservative leverage and operating profile, strong credit and performance trends, good liquidity and experienced management team. Rating constraints include limited financial flexibility due to a high proportion of secured funding, exposure to cyclical commercial real estate (CRE) markets, operating history limited to post-crisis and key man risk.

RATING SENSITIVITIES

The Stable Outlook assigned to Ladder reflects Fitch's expectation that the company will continue to prudently grow its business, maintain underwriting standards, manage leverage conservatively, monetize or lower its direct real estate equity exposure, access diversified funding sources, while maintaining adequate liquidity levels.

The following factors may have a positive impact on Ladder's ratings and/or Outlook:

--Greater revenue diversity with reduced reliance on gain on sale income;

--Sustained profitability and asset quality performance through multiple market environments, while maintaining conservative leverage and strong liquidity levels;

--Increased economical access to long-term unsecured debt funding.

The following factors may have a negative impact on Ladder's ratings and/or Outlook:

--Regulatory or political risks that impede access to FHLB borrowings without an offsetting increase in long-term economical sources of funding;

--Change in management that adversely impacts the current balanced and conservative approach of operating the company;

--Material increase in exposure to real estate equity investments without adequate reserves and commensurate decrease in leverage;

--An increase in leverage beyond the company's articulated target;

--Reduction in liquidity levels or unencumbered assets relative to outstanding debt;

--Sustained operating losses or material weakening of asset quality.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Criteria for Rating U.S. Mortgage REITs and Similar Finance Companies' (Feb. 25, 2014);

--'Global Financial Institutions Rating Criteria' (Jan. 31, 2014);

--'Finance and Leasing Companies Criteria' (Dec. 11, 2012).

Applicable Criteria and Related Research:

Criteria for Rating U.S. Mortgage REITs and Similar Finance Companies

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=737475

Global Financial Institutions Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=732397

Finance and Leasing Companies Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=696720

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=843175

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