Photographer: Michael Nagle/Bloomberg

Rebuffed by Real Estate Lender, Related Weighs a Takeover

  • Holder of 6.5% of lender may run slate of candidates for board
  • Related, Corvex led overthrow at Commonwealth, installing Zell

Related Cos. is considering nominating a slate of alternative candidates for the board of Ladder Capital Corp. after being rebuffed in a bid to buy the commercial real estate lender, a person with knowledge of the situation said.

Related, founded by Miami Dolphins owner Stephen Ross, is weighing a range of options to influence the management of Ladder Capital, said the person, who asked not to be identified because the discussions are private. It withdrew its offer earlier Tuesday, saying it hadn’t received information from Ladder that could have allowed it to raise an earlier bid for the firm. Related, the lead developer of the Hudson Yards project on Manhattan’s far West Side, owns about 6.5 percent of Ladder.

It was Related, along with Corvex Management LP, that led the 2014 campaign to oust the board of Commonwealth REIT and installed billionaire real estate investor Samuel Zell as chairman of the Chicago-based office landlord.

Related declined to comment. Two calls to Ladder’s investor-relations office weren’t returned.

Ladder Capital fell the most in 16 months after Related withdrew its bid, saying it had not received information from Ladder that could have allowed it to raise an earlier offer for the firm. Related had offered almost $1.5 billion in January. The $15-a-share offer was 10 percent more than Ladder’s closing price on Jan. 12, the last trading day before Related’s proposal. The lender rejected it, saying it undervalued the company.

Ladder shares were down 5.9 percent to $14.09 at 1:45 p.m. in New York after sliding as much as 8.5 percent, the biggest intraday decline since December 2016. The market was probably pricing in a greater-than-50-percent likelihood of Related and Ladder reaching a deal, Jade Rahmani, an analyst at Keefe Bruyette & Woods Inc., wrote in a note Tuesday following Related’s filing.

JMP Securities analyst Steve Delaney said in a note that he is weary of speculation about Related buying Ladder, calling its filings on the matter “bizarre.” He said he wouldn’t “spend another moment of thought or conversation about the Related matter. Rather, we intend to focus on Ladder’s favorable corporate structure, well-positioned platform and its undervalued real estate assets.”

New York-based Ladder, whose annual meeting is set for June 6, has been rapidly increasing its balance-sheet loans, which grew by 64 percent last year to $3.28 billion. The firm should also benefit from rising interest rates, Chief Executive Officer Brian Harris said on a call with analysts in February. Ladder and Related signed a confidentiality agreement that month that was supposed to set the stage for further negotiations.

— With assistance by Neil Callanan, and Felice Maranz

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