Moody's upgraded Ladder Capital Corp.'s long-term corporate family rating to Ba1 from Ba2 and Ladder Capital Finance Holdings LLLP's long-term senior unsecured rating to Ba2 from Ba3.

Moody's revised the outlook to stable from positive.

Moody's upgrade reflects its view that the companies' funding profile will improve when they complete their issuance of $500 million of senior unsecured debt. The company will use proceeds from the offering to repay secured debt, which Moody's said will reduce the ratio of secured debt to gross tangible assets to about 46% as of Dec. 31, 2019, from 56% as of Sept. 30, 2019. The rating agency said the reduced reliance on secured debt will increase the companies' unencumbered asset pool and expand access to unsecured debt investors. The ratings upgrade also reflects Moody's expectation that the companies' secured debt ratio will remain close to 45%.

The companies' ratings and stable outlook are supported by their strong and consistent financial performance, including moderate leverage, high-quality assets, a history of profitability since inception and increasing funding diversification, according to Moody's. The ratings also consider the companies' business concentration in the commercial real estate sector and the relatively high proportion of secured funding in their debt capital structure, despite the recent decline.