Ladder Capital Corp Q1 FY2026 earnings call

Lata had a strong first quarter with robust origination activity and earnings growth. Near-term strategy is to grow distributable earnings and deliver attractive risk-adjusted returns. Since March 31st, 2025, loan portfolio has grown nearly 60%, balance sheet loans now 46% of total assets and leverage moving back to three times. First quarter deployed approx $900 million in new investments, over $620 million in new loans and $264 million in securities. Securities portfolio $2.1 billion, 36% of total assets, predominantly AAA rated. Book value stable reflecting underwriting quality. Ended quarter with adjusted leverage at 2.3 times, secured $675 million in new unsecured capital commitments. Repurchased common stock and declared dividend.

Ladder generated distributable earnings of $28 million or 22 cents per share in the first quarter. Since March 31st, 2025, the loan portfolio has grown by nearly 60%, with balance sheet loans now accounting for 46% of total assets. In the first quarter, approximately $900 million in new investments were deployed, over $620 million in new loans with a weighted average spread of 300 basis points, and $264 million in securities with a weighted average yield of 5.22%. The $2.1 billion securities portfolio, representing 36% of total assets, is predominantly AAA rated. The $1 billion real estate portfolio generated $15.9 million of net operating income in the first quarter.

Expect returns to strengthen and dividend coverage to expand as portfolio grows. Anticipate fully drawing on the $275 million term loan in the second quarter to fund loan origination. Expect asset base and earnings to stay on a positive trajectory in the quarters ahead.

Macro market volatility creating selective opportunities but also risks. Geopolitical uncertainty may impact. High volatility as measured by VIX can lead to trading halts and credit committees not meeting.

Q: When do you expect the distributable earnings of the company to exceed the dividend?

A: Next quarter.

Q: Do you have a target in mind for the loan portfolio size?

A: Not particularly, but expect things to roll out of securities and into loans.

Q: Lastly, on the net lease portfolio, can you give an update as to what your plans are there to aim to grow it?

A: Will sell occasionally into 1031 market, grow as conditions warrant but not overly aggressive.

Q: Could you maybe provide some more color kind of on the 2026 vintage you're seeing right now compared to years past?

A: Bifurcation with acquisition side attractive, refinance world messy.

Q: Nice to see the $80 million of loan resolutions through foreclosure, but I don't see any realized losses or write-offs in the quarter. Does that mean that your attachment point on these assets was equal to the fair value marks?

A: Comfortable with it, taken initial write-downs sometimes but comfortable with real estate.

Q: Can you guys talk about kind of the timing of loan closings during the quarter?

A: Not particularly back-ended, strong seven months with high quality portfolio.

Q: Can you guys talk about kind of the timing of loan closings during the quarter?

A: Not particularly back-ended, strong seven months with high quality portfolio.

Q: Any commentary on bank activity, right, with less regulation, et cetera?

A: Banks returning, losing some smaller loans but comfortable with competitive set.

Q: can you expand on whether or not you're seeing the macro uncertainty and volatility causing any borrower appetite to change at all?

A: Appetite driven by rates, interrupted by high volatility as measured by VIX.

Q: Have you seen spreads? You touched on in the opening remarks that you're seeing some opportunities potentially in office given the volatility. Are you seeing spreads, whether in office or multi-industrial, really changing on what you guys are underwriting over the last, say, 60 days?

A: Office spreads changed, some opportunities in high quality office sector