Related Cos. Steps Up with $80M for Ladder Capital

The firm purchased stock from pre-IPO shareholders of Ladder, including affiliates of TowerBrook Capital Partners and GI Partners.

New York—Related Cos. has made a strategic investment in Ladder Capital Corp., purchasing $80 million of Ladder stock from certain pre-IPO shareholders of Ladder, including affiliates of TowerBrook Capital Partners and GI Partners. The investment was made by Related Real Estate Fund II, an opportunity fund with equity commitments of more than $1 billion.

Justin Metz, Managing Principal, Related Fund Management
Justin Metz, Managing Principal, Related Fund Management

In connection with the investment, Related has received a right of first offer with respect to certain horizontal risk retention investments in which Ladder intends to retain an interest. (Ladder’s IPO was issued in early 2014).

Also in conjunction with the investment, Ladder agreed to appoint Richard O’Toole as executive vice president & general counsel of Related, to replace Jonathan Bilzin, managing director of TowerBrook Capital Partners, on Ladder’s board of directors, effective as of closing. Bilzin noted that TowerBrook will remain “a large shareholder” in Ladder.

O’Toole has more than 35 years of legal, investment and tax experience with respect to CRE. He joined Related in 2005 from Paul, Hastings, Janofsky & Walker LLP, where he served as a partner in the Tax Department for five years, prior to which he was a partner in the Tax Department at Battle Fowler LLP for 13 years.

O’Toole serves on the boards of directors of Sterling Bancorp and its subsidiary bank; Equinox; Motivate, the operator of Citi Bike; and numerous subsidiaries of Related. He holds an LLM from New York University, a J.D. from St. John’s University School of Law and a B.A. from St. John’s University.

“Ladder’s strong and seasoned management team operates a disciplined and differentiated mortgage-focused lending platform and we believe the company is undervalued by the public marketplace,” Justin Metz, managing principal of Related Fund Management, said in a prepared statement. “The ability to acquire a significant stake, as well as join the Board, makes this investment an ideal fit for Related Fund Management and we look forward to a long-term partnership with Ladder.”

Jeff Blau, CEO of Related Cos. said, “Ladder’s core earnings have been positive each quarter since their inception and they have never had a credit loss. We saw a strategic investment opportunity because we believe that the company’s reported depreciated book value is a conservative representation of Ladder’s actual value.”