Ladder Capital(US:LADR)2026-02-05 16:02Financial 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]