Ladder Capital(LADR) - 2024 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Ladder Capital Corp generated distributable earnings of $37.7 million, or$0.30 per share, resulting in a return on equity of 9.8% with adjusted leverage of 1.6 times [4][10] - The company maintained a steady book value and reported $1.9 billion in liquidity, with$1.6 billion in cash and cash equivalents, representing approximately 30% of the balance sheet [4][10] - The loan portfolio totaled $2 billion, accounting for 38$853 million, primarily consisting of AAA-rated securities with a weighted average yield of 6.8% [9][12] - The real estate segment generated $14.1 million in net rental income, mainly from net lease properties with long-term leases to investment-grade rated tenants [9][13] Market Data and Key Metrics Changes - The company received$492 million in loan paydowns during the third quarter, marking the second-highest quarterly payoff level in its history [7][19] - After the quarter end, an additional $64 million in loan repayments was received, indicating strong credit culture and liquidity [7][19] - The unencumbered asset pool stood at$3.7 billion, or 68% of total assets, enhancing financial flexibility [15] Company Strategy and Development Direction - Ladder plans to capitalize on market share held by regional banks and highly leveraged non-bank competitors, focusing on attractive securities and loan origination [18][19] - The company aims to achieve investment-grade status to enhance market position and attract a broader range of investors [5][14] - The management emphasizes a disciplined lending approach and strong credit culture to differentiate itself in the market [19][45] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the investment landscape due to increased transaction levels and reduced competition in the middle market [7][19] - The company is well-positioned for future growth with significant liquidity and a strong balance sheet, despite challenges in the commercial real estate market [4][17] - Management noted that the lending business is picking up, with more applications and signed deals expected in the coming quarters [26][32] Other Important Information - Ladder issued $500 million in unsecured corporate bonds, which contributed to a positive outlook from rating agencies [13][14] - The company repurchased$1.2 million of its common stock at a weighted average price of $11.91 per share during the third quarter [15][16] - The dividend declared was$0.23 per share, which remains well-covered by distributable earnings [16][40] Q&A Session Summary Question: What are the best opportunities in the market? - Management is focused on multifamily and industrial properties, avoiding construction loans, and looking for recapitalization opportunities [21][22] Question: What is driving the high loan repayment numbers? - The repayment is primarily driven by refinancing, especially in the apartment sector, although many loans require extensions [22][23] Question: How confident is the company in backfilling the loan book? - Management is seeing an increase in loan applications and expects a significant uptick in originations in the upcoming quarters [26][32] Question: How does the company view equity investments in the current market? - The company finds equity investments attractive but requires higher returns than typical institutional equity investors [33][34] Question: Will the company continue its stock buyback program? - Management confirmed that the buyback program will likely continue, with over $40 million remaining in authorization [35][40] Question: What is the outlook for the commercial real estate market? - Management believes that while there are challenges, the market is stabilizing, and they are optimistic about future opportunities [62][64]