NexPoint Real Estate Finance (NYSE:NREF) Q4 2025 Earnings call February 26, 2026 11:00 AM ET Speaker5Thank you for standing by. My name is Jordan, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the NexPoint Real Estate Finance Q4 2025 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star follo ...

Core Insights - Ladder Capital achieved significant growth in loan originations, with nearly $950 million in new loans in the second half of the year, marking the best performance in over three years [1] - The company generated distributable earnings of $109.9 million for the full year, achieving a 7.1% return on equity and maintaining a stable book value [3][4] - Ladder Capital became the only investment-grade rated commercial mortgage REIT, enhancing its access to capital markets and reducing its cost of funds [3][12] Financial Performance - In the fourth quarter, Ladder generated distributable earnings of $21.4 million, or $0.17 per share, which adjusted for a loan loss, would be $0.21 per share [4][11] - The loan portfolio totaled $2.2 billion at year-end, representing 42% of total assets, with a weighted average yield of 7.8% [1][16] - The company maintained robust liquidity of $608 million, including $570 million of undrawn capacity on its unsecured revolving credit facility [8][13] Investment Strategy - Ladder's investment strategy focuses on stable income-producing collateral, primarily in multifamily and industrial properties, with a reduction in office loan exposure from 14% to 11% [1][5] - The company made strategic investments in office properties, including a $25.8 million equity investment for a 20% interest in a Manhattan office property [5] - Ladder's securities portfolio totaled $2.1 billion, with 99% rated investment-grade and 97% rated AAA, underscoring its high credit quality [18] Market Positioning - Ladder's capital structure is predominantly unsecured, allowing it to operate independently of repo and CLO markets, positioning the company to capitalize on future opportunities [2][7] - The company has seen its bonds tighten significantly, outperforming comparably rated equity REIT bonds, which enhances its competitive positioning [7] - Ladder's focus on lower leverage models and disciplined underwriting practices has allowed it to avoid significant losses compared to industry peers [49] Future Outlook - The company plans to drive growth in loan originations and earnings in 2026, with expectations to increase the loan portfolio to over $6 billion by year-end [30][32] - Ladder anticipates a continued focus on lending opportunities, particularly in the commercial real estate market, as acquisition activity improves [5][23] - The company aims to attract high-quality equity REIT shareholders and align its valuation with peers to further reduce its cost of capital [9]

Financial Data and Key Metrics Changes - Ladder Capital generated distributable earnings of $21.4 million or $0.17 per share in Q4 2025, with adjusted earnings of $26.4 million or $0.21 per share after accounting for a $5 million realized loan loss [3][13] - For the full year 2025, distributable earnings totaled $109.9 million, achieving a 7.1% return on equity [3][4] - The adjusted leverage ratio was 2.0 times stable book value, with liquidity maintained at $608 million, including $570 million of undrawn capacity on the unsecured revolver [4][16] Business Line Data and Key Metrics Changes - In 2025, Ladder originated $1.4 billion in new loans, the highest annual volume since 2021, with nearly $950 million in the second half of the year [5][6] - The loan portfolio totaled $2.2 billion at year-end, representing 42% of total assets, with a weighted average yield of 7.8% [7][18] - The securities portfolio reached $2.1 billion, with 99% rated investment grade and 97% rated AAA, providing a strong liquidity source [20] Market Data and Key Metrics Changes - Office loan exposure decreased from 14% to 11% of total assets by year-end, while new investments in office properties were selectively pursued [7][18] - The real estate portfolio generated $14.8 million of net operating income in Q4 and $57.3 million for the full year, supported by active leasing and asset management [9][20] Company Strategy and Development Direction - Ladder Capital aims to drive growth by increasing loan originations to enhance returns and support dividend growth while maintaining balance sheet discipline [12][22] - The company plans to capitalize on opportunities in the commercial real estate market, with a focus on stable income-producing properties [7][11] - The achievement of investment-grade status in 2025 has enhanced access to capital markets and reduced funding costs, positioning the company for future growth [4][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating potential market volatility, viewing it as an opportunity rather than a threat [30] - The company anticipates a return to growth in the loan portfolio, projecting an increase to over $6 billion by year-end 2026 [32] - Management highlighted a cautious approach to underwriting, particularly regarding bridge loans, to avoid past mistakes seen in the industry [51][60] Other Important Information - Ladder Capital issued its inaugural $500 million investment-grade unsecured bond at a fixed rate of 5.5%, which has performed well in the secondary market [9][15] - The company repurchased $10.2 million of common stock in 2025, with $90.6 million remaining under the stock repurchase program [17][16] Q&A Session Summary Question: Plans in light of potential volatility in 2026 - Management does not plan to change strategies due to volatility, viewing it as an opportunity for stable dividends based on traditional real estate [27][30] Question: Achievable ROE and loan portfolio growth - Management targets an ROE of 9-10%, with plans to grow the loan portfolio to over $6 billion by year-end [34][32] Question: Impact of net interest income decline - Management noted that net interest income may dip due to timing of loan funding but expects recovery in subsequent quarters [40][42] Question: Underwriting discipline for bridge loans - Management acknowledged past mistakes in underwriting and emphasized a cautious approach moving forward, particularly in large cities and refinancing competitor loans [51][60] Question: Competitive landscape with banks returning to lending - Management noted that while banks are becoming more competitive, they are focusing on construction loans, leaving opportunities for Ladder in refinancing and bridge loans [67][70]

Financial Data and Key Metrics Changes - Ladder Capital generated distributable earnings of $21.4 million or $0.17 per share in Q4 2025, with adjusted earnings of $26.4 million or $0.21 per share after accounting for a $5 million realized loan loss [3][13] - For the full year 2025, distributable earnings totaled $109.9 million, achieving a 7.1% return on equity [3][4] - The adjusted leverage ratio was 2.0 times stable book value, with liquidity maintained at $608 million, including $570 million of undrawn capacity on the unsecured revolver [4][16] Business Line Data and Key Metrics Changes - In 2025, Ladder originated $1.4 billion in new loans, the highest annual volume since 2021, with nearly $950 million in the second half of the year [5][6] - The loan portfolio totaled $2.2 billion at year-end, representing 42% of total assets, with a weighted average yield of 7.8% [7][18] - The securities portfolio reached $2.1 billion, with 99% rated investment grade and 97% rated AAA, representing 39% of total assets [20] Market Data and Key Metrics Changes - The company reported a decline in office loan exposure from 14% to 11% of total assets by year-end, while selectively pursuing new investments in the sector [7] - The real estate portfolio generated $14.8 million of net operating income in Q4 and $57.3 million for the full year, supported by active leasing and asset management [9][20] Company Strategy and Development Direction - Ladder Capital aims to drive growth by increasing loan originations to enhance returns and support dividend growth while maintaining balance sheet discipline [12][22] - The company plans to capitalize on opportunities in the commercial real estate market, with a focus on stable income-producing properties [7][25] - Ladder's investment-grade status enhances access to capital markets, lowering the cost of funds and strengthening liquidity [4][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating potential market volatility, viewing it as an opportunity rather than a threat [30] - The company anticipates a loan portfolio growth to over $6 billion by year-end 2026, with a target return on equity of 9-10% [32][34] - Management highlighted a cautious approach to underwriting, particularly regarding bridge loans, to avoid past mistakes in the industry [59] Other Important Information - Ladder's CECL reserve level was maintained at $47 million, or $0.37 per share, deemed sufficient to cover potential losses in the loan portfolio [19][20] - The company repurchased $10.2 million of common stock in 2025, with $90.6 million remaining under the stock repurchase program [17] Q&A Session Summary Question: Plans in light of potential volatility in 2026 - Management does not plan to change strategies due to volatility, viewing it as an opportunity for stable dividends based on traditional real estate [27][30] Question: Achievable ROE and loan portfolio growth - Management expects to grow the loan portfolio to over $6 billion by year-end and anticipates an ROE of 9-10% [32][34] Question: Impact of net interest income decline - Management noted that net interest income may dip due to timing of loan fundings but expects recovery in subsequent quarters [40][42] Question: Underwriting lessons from past bridge loans - Management acknowledged past mistakes in underwriting and emphasized a more cautious approach moving forward, particularly in large cities and refinancing competitor loans [59] Question: Competitive landscape with banks returning to lending - Management noted that while banks are becoming more competitive, they are focusing on construction loans, leaving opportunities for Ladder in refinancing and bridge loans [67][69]

Financial Data and Key Metrics Changes - In Q4 2025, Ladder Capital generated distributable earnings of $21.4 million or $0.17 per share, which adjusted for a $5 million realized loan loss, resulted in earnings of $26.4 million or $0.21 per share [3][13] - For the full year 2025, distributable earnings totaled $109.9 million, achieving a return on equity of 7.1% [3][4] - The adjusted leverage ratio was 2.0 times stable book value, with liquidity maintained at $608 million, including $570 million of undrawn capacity on the unsecured revolver [4][15] Business Line Data and Key Metrics Changes - In 2025, Ladder originated $1.4 billion in new loans, the highest annual volume since 2021, with Q4 alone contributing over $870 million in new investments [5][6] - The loan portfolio totaled $2.2 billion at year-end, representing 42% of total assets, with a weighted average yield of 7.8% [18][20] - The securities portfolio reached $2.1 billion, with 99% rated investment grade and 97% rated AAA, indicating high credit quality [20] Market Data and Key Metrics Changes - The company reported a decline in office loan exposure from 14% to 11% of total assets by year-end, while selectively pursuing new investments in the office sector [6][10] - The real estate portfolio generated $14.8 million of net operating income in Q4 and $57.3 million for the full year, supported by active leasing and asset management [9][20] Company Strategy and Development Direction - Ladder Capital aims to drive growth by increasing loan originations to enhance returns and support dividend growth while maintaining balance sheet discipline [12][22] - The company plans to capitalize on opportunities in the commercial real estate market, with a focus on stable income-producing properties, primarily multifamily and industrial [6][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating potential market volatility, emphasizing that the current environment presents opportunities rather than challenges [28][30] - The company anticipates achieving a return on equity of 9-10% within the current capital structure, with plans to grow the loan portfolio to over $6 billion by year-end [31][34] Other Important Information - Ladder Capital's inaugural $500 million investment-grade unsecured bond was issued at a fixed rate of 5.5%, with pricing tightening significantly since issuance [9][14] - The company repurchased $10.2 million of common stock in 2025, reflecting confidence in its financial position and commitment to shareholder value [17] Q&A Session Summary Question: How is Ladder planning to address potential volatility in the market? - Management indicated no significant changes in strategy due to volatility, viewing it as an opportunity for stable dividend investments [28][30] Question: What is the achievable ROE and loan portfolio size by year-end? - Management expects an ROE of 9-10% and plans to grow the loan portfolio to over $6 billion by year-end [31][34] Question: How does Ladder view competition from regional banks? - Management noted that while banks are becoming more competitive, they are primarily focused on construction loans, leaving opportunities for Ladder in refinancing and bridge loans [66][69]

Summary of Franklin BSP Realty Trust (FBRT) FY Conference Call Company Overview - **Company Name**: Franklin BSP Realty Trust (FBRT) - **Ticker Symbol**: FBRT - **Type**: Commercial Mortgage REIT - **Public Since**: 2021 via a reverse merger with Capstead Mortgage - **External Manager**: Benefit Street Partners, owned by Franklin Templeton - **Assets Under Management (AUM)**: $90 billion, with $13 billion in commercial real estate [2][3] Financial Performance - **Core Portfolio Size**: $4.4 billion, aiming for a target of around $5 billion [4] - **Net Leverage**: Approximately 2.5 times as of September 30 [4] - **Dividend Yield**: Currently at 14%, significantly high compared to the book value [5][15] - **Stock Price**: Trading at about 70% of book value [5] Portfolio Composition - **Asset Focus**: 75% of the portfolio is in multifamily assets, with the remainder in hospitality and industrial [4][5] - **Geographic Focus**: Primarily in the Southwest, Southeast, and Sunbelt areas, with significant exposure to Texas and the Carolinas [6] - **Office Assets**: Only about 2% of the portfolio is in office assets, with no new loans originated in this category since 2020 [7] Recent Developments - **CLO Issuance**: Issued a $1.1 billion CLO to recapitalize and free up cash for reinvestment into the core loan portfolio [9] - **Acquisition of NewPoint**: Closed on July 1, 2025, acquiring agency licenses and a bridge loan portfolio, which is expected to enhance origination capabilities [10][11] - **NewPoint's Performance**: Achieved record agency originations of $2.1 billion in the latest quarter [10] - **Mortgage Servicing Rights (MSRs)**: Integration of MSRs expected to contribute to book value growth over time [12] Future Outlook - **Dividend Coverage**: Management is focused on achieving dividend coverage by the second half of 2026, with a path outlined for improvement [15][19] - **Earnings Growth**: Expected contributions from CLO issuance, REO asset management, and NewPoint integration to enhance earnings per share [16][18] - **REO Management**: Strategy to stabilize and sell multifamily REO assets rather than liquidating immediately, with expectations of adding 8-12 cents to earnings per share [17][18] Key Risks and Considerations - **Market Conditions**: The company is navigating a challenging environment with legacy portfolio issues but has maintained a focus on multifamily assets to mitigate risks [7] - **Interest Rate Impact**: Portfolio is divided between loans originated before and after interest rate hikes, with 40% of the portfolio in pre-hike loans [6] Conclusion Franklin BSP Realty Trust is strategically positioned within the commercial mortgage REIT sector, focusing on multifamily assets and leveraging recent acquisitions to enhance growth and dividend coverage. The company is actively managing its portfolio and capital structure to navigate current market challenges and capitalize on future opportunities.

Financial Data and Key Metrics Changes - For the quarter ended September 30, 2025, the company generated distributable earnings of $0.31 per share, covering the dividend of $0.30 per share [5][13] - The net interest income for the same quarter was reported at $6.1 million, with GAAP net income of $4.05 million [13][14] - As of September 30, 2025, total assets were $258.8 million, and total shareholder equity was $184.6 million, resulting in a book value of $13.76 per share [14] Business Line Data and Key Metrics Changes - The company’s portfolio had $367 million in commitments, with $253 million funded across 13 loans as of September 30, 2025 [14] - Subsequent to the quarter end, the company closed on $56 million of loan commitments, including a $30 million senior bridge loan for a retail property refinancing [12] Market Data and Key Metrics Changes - The company noted a significant increase in financing requests compared to the first half of the year, attributed to borrowers' confidence in declining short-term interest rates [8][9] - Traditional commercial banks are gradually re-entering the market, focusing on lower leverage lending, which is seen as a positive sign for liquidity in the commercial real estate financing ecosystem [9][10] Company Strategy and Development Direction - The company focuses on originating transitional loans primarily in the southern United States, leveraging local expertise for attractive risk-adjusted returns [5][6] - The long-term goal is to achieve an investment-grade rating within the next three to five years, with a current leverage of approximately 0.4 times, significantly below the peer average [5][6] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the current market environment, noting a healthy increase in transaction volume and a narrowing bid-ask spread [9][10] - The company remains focused on transitional real estate projects, which are believed to provide the strongest risk-adjusted returns [10] Other Important Information - The weighted average loan-to-cost at closing is reported at 56%, contributing to strong credit performance [6] - Approximately 95% of the company’s loans are floating rate, with an average SOFR floor of about 4%, which is expected to enhance net interest margins as SOFR decreases [6] Q&A Session Summary Question: What new geographies within the southern U.S. are being seen in the pipeline? - The company is focusing on Florida, Texas, North Carolina, Georgia, and Tennessee, with ongoing deal flow in these areas [16][17] Question: Are there any geographies that stand out as the most attractive for investment? - Texas and Florida continue to present interesting opportunities, with the Carolinas and Tennessee also being areas of focus [18][19] Question: How is the debt side of the business strategy progressing? - The company is not pursuing a repo line and aims for an investment-grade rating, focusing on expanding bank lines and considering preferred or unsecured debt offerings [24][25] Question: How is the portfolio performing and what trends are being observed? - The portfolio is performing as expected, with steady progress in construction activities and a recent pickup in for-sale projects due to migration trends [30][31]

Financial Data and Key Metrics Changes - For Q3 2025, the company generated distributable earnings of $0.31 per share, covering the dividend of $0.30 per share [5][13] - Net interest income for the quarter was $6.1 million, with GAAP net income at $4.05 million [13][14] - The company ended the quarter with total assets of $258.8 million and total shareholder equity of $184.6 million, resulting in a book value of $13.76 per share [14] Business Line Data and Key Metrics Changes - The portfolio had $367 million in commitments and $253 million in principal outstanding across 13 loans as of September 30, 2025 [14] - The weighted average loan-to-cost at closing was 56%, indicating conservative positioning [6] - Approximately 95% of the loans are floating rate, with an average SOFR floor of about 4% [6] Market Data and Key Metrics Changes - There has been a notable increase in financing requests, indicating a recovery in the real estate market [8][9] - The bid-ask spread between buyers and sellers is narrowing, which is increasing transaction volume [9] - Most new financing activity is concentrated in the bridge lending space, particularly in multifamily and industrial properties [10] Company Strategy and Development Direction - The company focuses on originating transitional loans primarily in the southern United States, aiming for attractive risk-adjusted returns [5][6] - The long-term goal is to achieve an investment-grade rating within the next three to five years [6] - The company is expanding its real estate pipeline, with two signed non-binding term sheets totaling approximately $170 million [11] Management's Comments on Operating Environment and Future Outlook - Management noted a renewed sense of interest rate stability, encouraging more sponsors to engage in capital planning [8] - The company remains confident in its ability to capitalize on attractive opportunities in the current market environment [12] - The underlying performance of the portfolio is progressing as expected, with no significant issues reported [30][31] Other Important Information - The company has a CESL reserve of approximately $400,000, or 17 basis points for loans at carrying value [14] - The board declared a dividend of $0.30 per share, paid on October 15, 2025 [13] Q&A Session Summary Question: What new geographies within the southern U.S. are being seen in the pipeline? - The company is focusing on Florida, Texas, North Carolina, Georgia, and Tennessee for new deals [17][18] Question: Are there any geographies that stand out as the most attractive for investment? - Texas and Florida continue to present interesting opportunities, with the Carolinas and Tennessee also being areas of focus [18][19] Question: How is the debt side of the business strategy progressing? - The company is not pursuing a repo line and is focused on obtaining an investment-grade rating while expanding bank lines [24][25] Question: How is the portfolio performing and what trends are being observed? - The portfolio is performing as expected, with steady progress in construction and sales [30][31]

Company Overview - Advanced Flower Capital (AFCG) is a Nasdaq-listed commercial mortgage REIT providing institutional loans to state law-compliant cannabis operators in the United States[12] - The company aims for attractive risk-adjusted returns with a target average portfolio gross yield of 12%-20%[12][13] - Shareholders approved the plan to convert from a REIT to a BDC, with over 61% of outstanding shares voted and approximately 94% of those votes cast in favor[12] Market Opportunity - The U S legal cannabis market is expected to reach $63 billion by 2030, with a total economic impact surpassing $200 billion[25] - Cannabis market is projected to grow at a CAGR of approximately 12% from 2025 to 2030, outpacing growth projections for wine, spirits, tobacco, and beer[28][31] - 42 states and DC have legalized medical cannabis, with 24 states and DC legalizing adult-use cannabis[32] Portfolio and Deal Flow - AFC's loan portfolio includes 14 loans to borrowers across 16 states[19] - The company has a deal selectivity of 34% since inception[42] - Total closed deals since inception amount to $930 million[42] - The company has sourced $261 billion in total deals since inception[42] - Current commitments stand at $340 million, with a principal balance of $328 million[42] Financial Performance - For the three months ended September 30, 2025, the company reported a net loss of $1249 million[54] - Distributable earnings for the three months ended September 30, 2025, were $354 million, or $016 per basic weighted average share[55] - For the nine months ended September 30, 2025, the company reported a net loss of $2159 million[54] - Distributable earnings for the nine months ended September 30, 2025, were $1147 million, or $052 per basic weighted average share[55]

Company Overview - Chicago Atlantic Real Estate Finance is a commercial mortgage REIT and institutional lender focused on state-licensed cannabis operators[10] - The company has closed over $3.2 billion in loans since its platform inception[8, 10] - The company's outstanding loan principal is $399.9 million with a gross portfolio yield of 16.5%[8] - The real estate collateral coverage in the current portfolio is 1.2x[8] Portfolio Diversification - The top 10 loans account for 65.7% of the outstanding loan principal[23] - The portfolio is diversified by rate type, with 36.7% in fixed-rate loans and 63.3% in floating-rate loans[23, 67] - The portfolio is diversified across various states, with Illinois at 19%, Ohio at 16%, Florida at 8%, Michigan at 14%, and California at 7%[26] - Loans with Retail/Industrial collateral are 31.6% and 47.1% of the portfolio respectively[28, 32] Financial Performance - For the three months ended September 30, 2025, net income was $8.93 million, or $0.42 per basic share[68] - Distributable Earnings for the three months ended September 30, 2025, were $10.52 million, or $0.50 per basic share[69]