Trump’s second largest creditor Ladder Capital continues transaction discussion with Related Fund Management

In December 2017, I reported on Trump’s two largest creditors Deutsche Bank, with an estimated $320 million of credit issued to Trump for three properties, and Ladder Capital Finance, with an estimated $280 million of credit issued to Trump for four properties in New York City.

In December 2016, Reuters reported that Ladder had been working with Citibank to explore a possible sale of the firm, and there was some speculation about the potential conflict of interest presented if a foreign government became a new part-owner of Trump’s debt.

A sale was not announced and instead, in February 2017, real-estate development firm Related Companies purchased $80 million of stock in Ladder Capital and gained a seat on Ladder’s board.

On January 16, 2018, The Real Deal reported that “Related Fund Management launched a bid to buy Ladder Capital for $15 per share.”

But a few days later, on January 25, 2018 The Real Deal reported that Ladder Capital rejected the takeover bid by an affiliate of Related Companies, Related Fund Management.

However, it appears that discussions between Ladder Capital Finance and Related Fund Management have continued.

A February 2018 13D SEC filing by Ladder Capital Corp. references Exhibit 9: “Confidentiality Agreement, dated February 2, 2018, between Related Management and the Issuer.”

The Confidentiality Agreement between “Related Fund Management, LLC and Ladder Capital Corp and/or an affiliate or subsidiary” lasts for a term of one year and covers discussions about a “possible negotiated transaction” between the two entities.

Ladder Capital Related Fund Management agreement

It is important to understand the beneficial owners of Trump’s debt, because it could present potential conflicts of interest.

For example a June 2017 Miami Herald article reported that the Related Group, the largest real estate developer in Southern Florida, was part of an affordable housing probe by the U.S. Attorneys office into fraud and abuse of federal tax credits.

In addition, Related Group Chairman Jorge Pérez has been a long-time friend and a former business partner of Donald Trump.

If the transaction discussions between Ladder and Related are successful and Related changes from 8% to 100% ownership, Related could be in the position of managing a significant amount of debt for Donald Trump, at the same time as the Federal government pursues a probe of Related.

Deutsche Bank has been fined hundreds of millions of dollars for laundering Russian money, and in large part because of the bank’s ties to Russia, Trump’s deals with Deutsche are the subject of various investigations and the bank has been covered extensively by the mainstream media.

However, beyond reporting by The Real Deal and myself, there continues to be little coverage of Trump’s second largest creditor Ladder Capital. While there are no known links between Ladder Capital and Russia or any foreign entity, it’s still important to monitor potential conflicts of interest for the financial entity that manages several hundred million dollars of debt for the U.S. president, Donald Trump.


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