Ladder Capital Corp Q3 FY2025 earnings call

• Ladder generated distributable earnings of $32.1 million or $0.25 per share, return on equity of 8.3% with modest adjusted leverage of 1.7x. • Notable developments: acceleration in new loan originations, continued reduction in office loan exposure, successful inaugural investment-grade bond offering. • Loan origination activity accelerated in Q3 with $511 million of new loans, highest in over 3 years. • Reduced office loan exposure to $652 million (14% of total assets) with full payoff of a $63 million office loan. • Secured $500 million 5-year investment-grade bond offering at 5.5%, with bonds trading tighter in secondary market. • Liquidity maintained at $879 million, including $49 million in cash and $830 million undrawn capacity on unsecured revolver.

Loan Portfolio: Originated $511 million in new loans across 17 transactions in Q3 with a weighted average spread of 279 basis points, highest quarterly origination volume in over 3 years. Loan portfolio grew by ~$354 million to $1.9 billion, representing 40% of total assets. Weighted average yield of approximately 8.2%, with 3 non-accrual loans totaling $123 million (2.6% of total assets). Securities Portfolio: Totaled $1.9 billion (40% of total assets). Acquired $365 million in AAA-rated securities, received $164 million in paydowns, sold $257 million, generating a $2 million net gain. Real Estate Portfolio: $960 million portfolio generated $15.1 million in net operating income in Q3, primarily consisting of net lease properties with long-term leases to investment-grade rated tenants.

• Expect fourth quarter loan originations to exceed third quarter production. • Lower cost of debt and expanded access to deeper, more stable capital base due to recent credit rating upgrades and investment-grade bond issuance. • Aim to position Ladder alongside broader set of high-quality peers, including equity REITs, and believe equity valuation will reflect strength of senior secured investment strategy and conservative capital structure.

• Market volatility could affect loan closings. • Political and geopolitical factors may impact the number of loans that close. • Potential widening of spreads in the mortgage market, which could affect securities and loan portfolio performance.

Q: Interested to know if doing anything differently on origination side since IG rating, possibly opening up to larger or more stable deals.

A: Looking at slightly larger transactions, assets being lent on are of much better quality than previously, focusing on newly built Class A apartment complexes and new industrial portfolios.

Q: Curious about lending portfolio growth, specifically $1.9 billion loan portfolio.

A: Expect $1.9 billion loan portfolio to grow, with fourth quarter off to good start, expecting $1 billion increase, driven by more active origination and securities payoffs.

Q: Contemplating launching securities fund or spinning off triple net portfolio.

A: Considered launching securities funds before, looked at residential mortgage arm, and may spin off triple net portfolio to fine-tune valuation, but first focus on being investment-grade company.