The mainstream media has reported on Deutsche Bank, but has barely covered Ladder Capital Finance, so below is a chart and article with some key highlights on the company that holds a substantial amount of Trump debt.
Ladder Capital, Deutsche Bank, Trump & Kushner
While the media has frequently covered Deutsche Bank, there has been very little coverage of Ladder Capital Finance, despite its importance as one of the largest creditors of the U.S. president. A June 2017 article had a very brief overview of the ‘obscure’ company financing the president, while Crain’s provided insight on how “Trump’s relationship with Ladder underscores the growth in the city’s shadow-banking industry. The term refers to a wide array of financial institutions that make loans and perform other bank-like activities but aren’t regulated as such.” Unlike a typical bank, Ladder Capital is a Real Estate Investment Trust (REIT) that has a niche “writing riskier commercial mortgages than banks are typically comfortable with.”
A review of property records in NYC’s online document database ACRIS shows that loan agreements from Ladder Capital Finance for four Trump properties total $282 million (see links to source documents below). Two GAP mortgages for over $80 million were also recorded, but the ACRIS filings do not show if or when mortgages and loans have been paid. The data in Trump’s June 2017 financial disclosure (below) is vague, and shows Ladder debt ranging from $110 million to over $150 million. It is clear, however, that Ladder Capital Finance holds significant financial leverage related to money owed on four Trump real-estate holdings, including the well-known Fifth Avenue Trump Tower property.
Ladder Capital Finance launched in 2008 with CEO Brian Harris, President Greta Guggenheim, and Chairman of the Board Alan Fishman. TowerBrook Capital Partners, GI Partners, and Meridian Capital Group were founding investors. In 2009 Ladder Capital and Sovereign Bank spun off an underwriting group Beech Street Capital, which was sold in 2013 to Capital One. Ladder started doing business with Trump in 2012 when it provided a $73 million GAP mortgage and $100 million loan on Trump Tower.
In August 2015 co-founder Greta Guggenheim left Ladder to run TPG Capital’s new Real Estate Investment Trust unit. TPG launched its real estate finance subsidiary after it acquired $2.5 billion in high-yield real estate debt from Deutsche Bank. TPG Chairman and co-founder David Bonderman was covered in the news recently when he resigned from the Uber board after making sexist remarks. And Bonderman, along with Blackstone’s Stephen Schwarzman, was an original advisor to the government-backed Russian Direct Investment Fund.
There is no evident business connection directly between TPG and Ladder Capital, but it’s interesting to note how Greta Guggenheim’s career has connected to both of Trump’s largest creditors, Ladder and Deutsche. On her LinkedIn profile Guggenheim is listed as President of Ladder Capital from 2008 until 2015, and on the Ladder Capital website, Michael Mezzei is listed as President from 2012 until he retired in June 2017, when he joined the board, and Pamela McCormack became President.
In December 2016, Reuters reported that Ladder was 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 but 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.
Stephen Ross, the Chairman and Founder of Related Companies originally co-founded Related Group with Jorge Pérez, a long-time friend and a former business partner of Donald Trump. In early 2017 Pérez came out vocally in interviews denouncing the idea of building a border wall with Mexico, calling it “the most idiotic thing I’ve ever seen or heard in my life.”
More recently, a Miami Herald article announced that the Related Group, the largest real estate developer in Southern Florida, is part of an affordable housing probe by the U.S. Attorneys office into fraud and abuse of federal tax credits. While there is no indication what involvement, if any, Pérez has in making decisions about the terms of the $280 million plus in loans made to Trump, it’s important to be aware of potential conflicts that could arise related to the Federal government probe of Related.
Long-time partner of Pérez, Stephen Ross who is chairman and founder of the Related Companies, also has a connection to Donald Trump through Deutsche Bank, where both have been clients of Rosemary Vrablic, a senior banker in Deutsche Bank’s private wealth management business.
Trump’s working relationship with Vrablic started in the mid 2000’s, when Deutsche Bank and other investors, including Treasury Secretary Steve Mnuchin’s former hedge fund, Dune Capital Management, financed a $640 million loan to build Trump International Hotel and Tower in Chicago. In 2008 a payment of $40 million, personally guaranteed by Trump, was due. Trump sued Deutsche Bank, Dune, and other lenders to extend the loan terms. In response Deutsche Bank sued Trump back, and ultimately the parties settled.
Trump received a loan from Deutsche Bank’s wealth management unit to pay off the $40 million debt and that loan was facilitated by Rosemary Vrablic. Trump moved his business from the commercial real estate lending division to the private wealth division where he did deals to finance Trump National Doral Miami and the Trump Old Post Office in Washington D.C.
In addition to Trump and Related Companies’ Stephen Ross, Rosemary Vrablic has also worked with Jared Kushner. A month prior to the 2016 election, Kushner received $285 million from Deutsche Bank, to refinance a loan used to purchase part of the former New York Times building from Africa Israel Investments (AFI), a company owned by Lev Leviev, which has been involved in the Prevezon money laundering case.
Kushner also has a connection with Ladder through founding investor Meridian Capital, which counts Kushner Companies as one of its largest customers. In 2012 Meridian arranged a $371 million loan, provided by Ladder Capital spin off Beech Street Capital, to Kushner Companies to fund their stake in several Maryland apartment buildings. Kushner Companies affiliate Westminster Management, which manages the Maryland units, is now involved in a tenant lawsuit alleging the firm charged improper fees and threatened eviction to force payment.
The various overlapping connections among these companies and developers is likely representative of common intersections in the finance and real-estate world. However, given the significant leverage Ladder Capital and Deutsche Bank have as holders of hundreds of millions of dollars of Trump debt, it’s important to bring these business connections and potential conflicts of interest to light.
Below is source information for financial data used in the chart above.
Ladder Capital Finance Loans
The loan amounts from Ladder Capital Finance to Trump, displayed in the chart above, are based on the most recent financial records filed in the NYC ACRIS database:
- 40 Wall Street — 7/2/15 loan agreement for $160,000,000
- Trump Tower Commercial LLC (721–725 Fifth Avenue) — 8/30/12 loan agreement for $100,000,000 (note: 8/30/12 GAP mortgage for $73,265,168.90 is not included in $282 million total Ladder estimate).
- Trump Plaza LLC (163–169 East 61st Street, 160–162 East 62nd Street, 165 East 61st Street) — 6/30/14 loan agreement for $15,000,000 (note: 6/30/14 GAP mortgage for $7,057,593.54 is not included in $282 million total Ladder estimate).
- Trump International Hotel & Tower — TIHT Commercial LLC (1 Central Park West) — 7/11/16 loan agreement for $7,000,000
Deutsche Bank Loans
Deutsche Bank Loan amounts to Trump are based on the following sources:
- Trump National Doral Hotel Miami FL ( Trump Endeavor 12 LLC) — $125 million mortgage 2015 (March 2017 Bloomberg article)
- Trump Old Post Office (Washington D.C.) — $170 million loan (March 2017 Bloomberg article)
- Trump International Hotel Chicago — unknown loan balance, estimated as $25 million (the lower end of $25-$50 million range in OGE form). Note: an additional loan of $50 million on this property from Chicago Unit Acquisition LLC is not included in the chart.
Trump Financial Disclosure Form
Below is the loan information for Ladder Capital and Deutsche Bank from Trump’s financial disclosureOGE Form 278e dated June 14, 2017:
Ladder Capital Finance — LADR Nasdaq information
Ladder Capital Finance (LADR) Ownership Summary — Top institutional holders (as of Dec 1, 2017)
Ladder Capital Finance — Additional Info:
Note: updated December 8, 2017
The Trump property at 40 Wall Street re-assigned the $160,000,000 mortgage from Ladder Capital to Wilmington Trust, National Association, as Trustee for the registered holders of Wells Fargo Commercial Mortgage Trust.