Ladder Capital Corp Q4 FY2025 earnings call

• Achieved investment-grade ratings from Moody's, Fitch, and S&P. - Fourth quarter distributable earnings were $21.4 million or $0.17 per share, adjusting for a $5 million realized loan loss gave $26.4 million or $0.21 per share. - Full-year 2025 distributable earnings were $109.9 million, with a 7.1% return on equity and adjusted leverage at 2.0 times. - Originated $1.4 billion in new loans in 2025, the highest annual volume since 2021; $870 million in new investments in the fourth quarter. - Loan portfolio at $2.2 billion, securities portfolio at $2.1 billion, real estate portfolio at $966 million with steady net operating income. - Issued $500 million investment-grade unsecured bond, with pricing tightening. - Office loan exposure reduced from 14% to 11% of total assets, selectively pursuing new office investments.

Loan portfolio: Totaled $2.2 billion, representing 42% of total assets. Securities portfolio: Totaled $2.1 billion, representing 39% of total assets. Real estate portfolio: $966 million, generating $14.8 million in net operating income in the fourth quarter and $57.3 million for the full year.

• Plan to drive growth by increasing loan originations to enhance returns and support dividend growth. - Expect to grow the real estate equity portfolio with selective investments in reset valuations. - Anticipate loan portfolio growth, aiming for an ROE of 9-10% within the current capital structure and planning to grow the loan portfolio over $6 billion by year-end.

• Macroeconomic volatility impacting commercial real estate markets. - Potential underwriting mistakes in bridge loans from past low cap rates, rising interest rates, work-from-home trends, and overinvestment in certain cities. - Competition from regional banks and other lenders in the commercial mortgage space.

Q: 2026 seems to be off to a pretty volatile start, any changes planned?

A: No major changes are planned; sees opportunities in bricks and mortar as a safe dividend option.

Q: What ROE do you think is achievable within the current capital structure and where do you see the loan portfolio going in size by year-end? And do you plan to grow the real estate equity portfolio?

A: Expect ROE of 9-10%, plan to grow the loan portfolio over $6 billion by year-end, and do plan to grow the real estate equity portfolio with selective investments.

Q: Quarter over quarter, net interest income ticked down, what's the reason?

A: Lumpy originations, with loans funded at end of December not contributing to net interest income immediately, but expecting pickup in Q1 2026 as payoffs slow and new loans contribute.

Q: What were the biggest mistakes in underwriting bridge loans in the past?

A: Cited low cap rates driven by zero interest rates, rapidly rising interest rates, work-from-home phenomenon, and overinvestment in certain cities; now more cautious on large cities with unionized workforces and crime.

Q: Talk about the competitive landscape as it pertains to banks in particular in 2026?

A: Banks are competing more on construction loans, but Ladder focuses on newer properties, avoids troubled areas, and has an average loan balance of ~$25 million, comfortable with the current competitive environment