Pursuit of REIT Status

Two firms are still actively pursuing mortgage REIT status, Jernigan Capital Inc., a new REIT in formation, and Ladder Capital, which is converting from a corporation to a REIT.

Jernigan Capital, which is looking to raise $110 million in an IPO, focuses on financing self-storage facilities. Its founder, chairman, president and CEO is Dean Jernigan, a 30-year veteran of the self-storage industry. he previously served as CEO of Storage USA and CubeSmart, both New York Stock Exchange listed self-storage REITs.

Jernigan noted in its filing that, although real estate fundamentals and specifically self-storage real estate fundamentals, have improved significantly since the recession, mortgage lending to the self-storage industry has not returned to pre-recession levels.

"We believe many traditional lenders do not possess the self-storage industry knowledge or experience to appropriately assess the risk of loans secured by self-storage facilities and are very reluctant to lend to self-storage operators and developers at the higher loan-to-value, or LTV, and loan-to-cost, or LTC, ratios at which self-storage loans were historically made prior to the recession," the firm noted in its filing.

Also, New York-based Ladder Capital Corp. has taken steps to convert to a REIT retroactively to Jan. 1 of this year. This week, Ladder’s stockholders voted to approve that plan.

Ladder originates and invests in a wide variety of commercial real estate and real estate-related assets, including first mortgage loans; securities secured by first mortgage loans and investments in net leased and other commercial real estate.