Ladder Capital Corp Q1 FY2025 earnings call

• Ladder generated distributable earnings of $25.5 million, or $0.20 per share, for return on equity of 6.6% with modest adjusted leverage of just 1.4 times in the first quarter.
• Over $1.7 billion or 51% of the balance sheet loans paid off in 2024, with nearly $600 million of proceeds from loan payoffs in the fourth quarter alone. Reinvestment momentum is building with $329 million in new loans originated and $521 million in AAA securities acquired in the first quarter, totaling over $800 million in investment activity.
• As of March 31, 2025, liquidity was $1.3 billion including $480 million in cash and cash equivalents. 83% of the asset base was unencumbered and 72% of debt was unsecured corporate bonds. Ladder remains on positive outlook from Moody's and Fitch, with S&P upgrading credit rating in 2024.
• Loan portfolio stood at $1.7 billion with a weighted average yield of 8.7% and future funding commitments totaling $40 million. Non-accrual loan balance represents only 2.6% of assets and CECL reserve remained at $52 million as of March 31, 2025.

Loan Portfolio:

• As of March 31, 2025, the loan portfolio stood at $1.7 billion, representing 38% of total assets, with a weighted average yield of 8.7%. During the first quarter, $181 million in loan payoffs were received, and $329 million in new loans were originated, with 74% of these originations backed by multi-family or industrial assets.

Securities Portfolio:

• During the first quarter, $521 million in AAA rated securities were acquired. As of March 31, the portfolio totaled $1.5 billion with a weighted average unlevered yield of 5.67%, 99% of which was investment grade rated and 96% was AAA rated.

Real Estate Portfolio:

• The $892 million real estate portfolio generated $12.2 million of net operating income during the first quarter. One net leased property was sold, generating a $900,000 gain in distributable earnings.

• Expect muted loan payoffs for the remainder of 2025 given the robust payoffs achieved in 2024.
• Expect origination activity to exceed the pace of the first quarter.
• Hopeful to become an investment-grade rated company in the near-term as Ladder is running a balance sheet within many investment-grade metrics of rating agencies and has a long track record as a disciplined and prudent manager of capital.

• Continued possibility of market volatility and uncertainty which may dampen price discovery and deal execution.
• Trade tensions have contributed to uncertainty and impacted commercial real estate demand, especially in sectors tied to global supply chains.
• Credit risk associated with the loan and securities portfolios.

Q: What percentage of the first quarter originations were backed by multi-family or industrial assets?

A: 74% Q: Does Ladder expect origination to maintain or exceed the pace of the first quarter?

A: I would expect them to exceed it Q: What are Ladder's views regarding the net lease portfolio?

A: We're prepared to hold all of them. There are active discussions on people wanting to buy those things, but there's no active attempt to sell them. Happy to add to or grow the portfolio. The yield curve steepening creates an arbitrage opportunity which may make it more attractive, but currently not actively eyeing specific actions regarding the portfolio