NEW YORK CITY—Ladder Capital said Mondayafternoon it planned to convert to a REIT, effective Jan. 1. Thecommercial real estate finance company's board hasapproved the REIT election, which would see LADR operate as aninternally managed trust with no changes to its business strategyor asset mix.

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“We've been exploring a range of corporate structuralalternatives with our legal, banking, accounting and tax advisorsfor some time now,” CEO Brian Harris said on aconference call late Monday afternoon. Among those options wasconversion to a REIT, and Harris said LADR looked at threeconsiderations: enhancing earnings to its shareholders; preserving“the strong operating synergies we enjoy between our businesssegments,” including CRE loans, securitizations and equity; andstriking “the right balance between paying distributions andretaining capital to position Ladder to seize on opportunities froma position of strength” during market cycles and other periodicdisruptions. “We believe our plan today gets this balanceright.”

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In considering a REIT election, LADR found that much of itsasset base is REIT qualified, said Harris. Those operations thatwouldn't qualify, such as LADR's conduit securitization andcondominium sales efforts, can fit into an appropriately structuredtaxable REIT subsidiary, he added.

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Following its REIT conversion, LADR will continue to focus oninvestments in senior secured commercial real estate assets. Consistent with the REIT elections, the company is targeting annualcash distributions of $100 million, which equates to dividends ofapproximately $0.25 per quarter per share currentlyoutstanding.

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LADR will seek a shareholder vote in the first quarter of 2015.Skadden, Arps, Slate, Meagher & Flom LLP andKirkland & Ellis LLP are serving as thecompany's legal advisors. J.P. Morgan, Citigroup, HoulihanLokey and Park Bridge Financial areacting as its financial advisors on certain aspects of the REITelection.

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Paul Bubny

Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.