Related makes $80M stock buy in Trump Organization’s second-largest lender

The development company announced its "strategic investment" in Ladder Capital on Tuesday

TRD LOS ANGELES /
Feb.February 28, 2017 10:45 AM

From the New York website: Related Companies purchased $80 million of stock in Ladder Capital, a Manhattan-based real estate investment trust best known for issuing more than $250 million in loans to the Trump Organization. Related bought the stock from pre-IPO shareholders of Ladder and the investment was made through “Related Real Estate Fund II,” the company’s opportunity fund with over $1 billion in equity commitments.

In a statement, Related CEO Jeff Blau cited Ladder’s deal sheet and said the company was currently undervalued. “Ladder’s core earnings have been positive each quarter since their inception and they have never had a credit loss,” Blau said.

Related’s [TRDataCustom] decision to invest in Ladder comes less than three months after rumors circulated that Ladder, which was founded in 2008, was up for sale. Shares of Ladder were trading at about $14 on the New York Stock Exchange on Tuesday morning. The company has a market capitalization of $1.7 billion, according to Yahoo! finance.

In less than 10 years, Ladder has lent the company headed by now-President Donald Trump more than a quarter billion dollars, and holds a $160 million loan for Trump’s ground lease at 40 Wall Street and a $100 million loan on Trump Tower. Although the company has stepped up to to give Trump debt when larger banks have not, Ladder’s CEO Brian Harris told the New York Times last year he’s never had any problem collecting payments. “I’ve read all the stories you’ve read, but I’ve never had a default,” Harris said.

As Trump’s critics continue to push for more transparency in his lending and income history, Related, like other shareholders of the publicly traded company, will effectively become a partial holder of more than $250 million of the president’s debt. The only bank to currently lend more to Trump is Deutsche, which holds more than $350 million of Trump’s debt, including a $170 million loan for Trump’s Washington D.C. hotel. Deutsche has been restructuring much of that debt to avoid potential conflicts of interest.

Along with the significant stake in Ladder, Related will also appoint an executive to the lender’s board of directors. Related’s general counsel, Richard O’Toole, will replace TowerBrook Capital Partner’s Jonathan Bilzin on the board, but TowerBrook remains a large shareholder, Bilzin said in a statement.

According to Crain’s, Ladder’s market specialty is taking on riskier loans than what large institutional lenders are typically comfortable with, and in 2015, it lent $21 million to struggling grocery store A&P, which went bankrupt the day after the loan closed.


Related Articles

arrow_forward_ios
From left: Jeff Worthe, Joyce Rey, Geoff Palmer, Jaime Lee and Frank Gehry (Credit: Alberto E. Rodriguez/Getty Images, Jonathan Leibson/Getty Images, Grant Smith/Construction Photography/Avalon/Getty Images)

Here are LA’s real estate players who donated to Biden and Trump in 2020

Here are LA’s real estate players who donated to Biden and Trump in 2020
Brookfield CEO Brian Kingston and 725 South Figueroa Street (Google Maps)

Brookfield lands $305M refi for Ernst & Young Plaza in DTLA

Brookfield lands $305M refi for Ernst & Young Plaza in DTLA
Interest rate drops spur loan requests from multifamily borrowers (Credit: iStock)

Multifamily owners rush to refinance their mortgages

Multifamily owners rush to refinance their mortgages
Best of TRD 2019 promo

Coming soon: The Real Deal’s Best of 2019

Coming soon: The Real Deal’s Best of 2019
2201 Rosecrans Ave in El Segundo

Continental snags $55M refi on El Segundo office portfolio

Continental snags $55M refi on El Segundo office portfolio
From left: Gavin Newsom and David Chiu (Credit: Getty Images and iStock)

Will rent control dent the multifamily market? Lenders, investors weigh in

Will rent control dent the multifamily market? Lenders, investors weigh in
East LA Community Corporation President Isela Gracian, CIT Bank President Robert Rubino and the two projects

East LA Community Corp. lands $55M in loans for affordable housing projects

East LA Community Corp. lands $55M in loans for affordable housing projects
From left: Jason Segel, Donald Trump, Shaun White White, and Dr. Dre (Credit: Getty Images)

This week in celeb real estate: Trump leaves Beverly Hills, Dr. Dre buys in Pacific Palisades… and more

This week in celeb real estate: Trump leaves Beverly Hills, Dr. Dre buys in Pacific Palisades… and more
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...