Ladder Capital Q4 2025 Ladder Capital Corp Earnings Call | AllMind AI Earnings | AllMind AI
Q4 2025 Ladder Capital Corp Earnings Call
Operator: Good morning, and welcome to Ladder Capital Corp's Q4 2025 earnings call. As a reminder, today's call is being recorded. This morning, Ladder released its financial results for the quarter and year ended December 31, 2025. Before the call begins, I'd like to call your attention to the customary Safe Harbor disclosure in our earnings release regarding forward-looking statements. Today's call may include forward-looking statements and projections, and we refer you to our most recent Form 10-K for important factors that could cause actual results to differ materially from these statements and projections. We do not undertake any obligation to update our forward-looking statements or projections unless required by law. In addition, Ladder will discuss certain non-GAAP financial measures on this call, which management believes are relevant to the assessment of the company's financial performance.
Operator: Good morning, and welcome to Ladder Capital Corp's Q4 2025 earnings call. As a reminder, today's call is being recorded. This morning, Ladder released its financial results for the quarter and year ended December 31, 2025. Before the call begins, I'd like to call your attention to the customary Safe Harbor disclosure in our earnings release regarding forward-looking statements. Today's call may include forward-looking statements and projections, and we refer you to our most recent Form 10-K for important factors that could cause actual results to differ materially from these statements and projections. We do not undertake any obligation to update our forward-looking statements or projections unless required by law. In addition, Ladder will discuss certain non-GAAP financial measures on this call, which management believes are relevant to the assessment of the company's financial performance.
Speaker #1: Corp's earnings call for the fourth quarter Good morning and welcome to Ladder Capital of 2025. As a reminder, today's call is being recorded. This morning, Ladder released its financial results for the quarter and year-ended December 31st, 2025.
Speaker #1: Before the call begins, I'd like to call your attention to the customary safe harbor disclosure in our earnings release regarding Ford looking statements. Today's call may include Ford looking statements and projections, and we refer you to our most recent Form 10-K for important factors that could cause actual results to differ materially from these statements and projections.
Speaker #1: We do not undertake any obligation to update our forward-looking statements or projections unless required by law. In addition, Ladder will discuss certain non-GAAP financial measures on this call, which management believes are relevant to the assessing of companies. Presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP.
Operator: company's presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. These measures are reconciled to GAAP figures in our earnings supplement presentation, which is available in the Investor Relations section of our website. We also refer you to our Form 10-K and earnings supplement presentation for definitions of certain metrics, which we may cite on today's call. At this time, I'd like to turn the call over to Ladder's president, Pamela McCormack.
Operator: company's presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. These measures are reconciled to GAAP figures in our earnings supplement presentation, which is available in the Investor Relations section of our website. We also refer you to our Form 10-K and earnings supplement presentation for definitions of certain metrics, which we may cite on today's call. At this time, I'd like to turn the call over to Ladder's president, Pamela McCormack.
Speaker #1: These measures are reconciled to GAAP figures in our earnings supplement presentation, which is available in the investor relations section of our website. We also refer you to our Form 10-K and earnings supplement presentation for definitions of certain metrics which we may cite on today's call.
Speaker #1: At this time, I'd like to turn the call over to Ladder's President, Pamela McCormack.
Speaker #2: Good morning and thank you for joining us Capital's fourth quarter and year-end results for 2025. This past year, marked a significant milestone for our company.
Pamela McCormack: Good morning, and thank you for joining us today. I'm pleased to report Ladder Capital's Q4 and year-end results for 2025. This past year marked a significant milestone for our company. We became the only investment grade-rated commercial mortgage REIT, underscoring our strong balance sheet management and conservative approach to leverage. Our robust positioning enables us to enter 2026 with a dedicated focus on driving earnings growth. Earnings and financial strength. During the Q4, Ladder generated distributable earnings of $21.4 million, or $0.17 per share. Adjusting for a $5 million realized loan loss that had previously been reserved for, the Q4 earnings were $26.4 million, or $0.21 per share. For the full year, Ladder generated distributable earnings of $109.9 million, delivering a 7.1% return on equity.
Pamela McCormack: Good morning, and thank you for joining us today. I'm pleased to report Ladder Capital's Q4 and year-end results for 2025. This past year marked a significant milestone for our company. We became the only investment grade-rated commercial mortgage REIT, underscoring our strong balance sheet management and conservative approach to leverage. Our robust positioning enables us to enter 2026 with a dedicated focus on driving earnings growth. Earnings and financial strength. During the Q4, Ladder generated distributable earnings of $21.4 million, or $0.17 per share. Adjusting for a $5 million realized loan loss that had previously been reserved for, the Q4 earnings were $26.4 million, or $0.21 per share. For the full year, Ladder generated distributable earnings of $109.9 million, delivering a 7.1% return on equity.
Speaker #2: We became the only investment-grade rated commercial mortgage management and conservative approach to positioning enables us to enter 2026 with a dedicated focus on driving earnings growth.
Speaker #2: Earnings and financial strength. During the fourth quarter, Ladder generated distributable earnings of rate underscoring our strong balance sheet 21.4 million dollars or 17 cents leverage.
Speaker #2: Per share. Adjusting for a $5 million realized loan loss that had previously been reserved for, the fourth quarter earnings were today $26.4 million, or $0.21 per share. Our robust share.
Speaker #2: For the full year, Ladder generated distributable earnings of $109.9 million. I'm pleased to report Ladder's 7.1 percent return on equity. With adjusted leverage at a modest 2.0 times, stable book value, and robust liquidity, these results reflect a solid year of strong performance and financial strength.
Pamela McCormack: With adjusted leverage at a modest 2.0 times stable book value and robust liquidity, these results reflect a solid year of solid performance and financial strength. Positioning for long-term growth. Achieving investment-grade status in 2025, with ratings from Moody's and Fitch, significantly enhanced Ladder's access to deeper and more stable capital markets. This achievement lowered our cost of funds and strengthened our liquidity profile. Building on this momentum, we are pleased to see S&P upgrade Ladder to double B plus, just one notch below investment grade. Our $850 million unsecured revolving credit facility remains a cornerstone of our funding strategy, complementing our unsecured bond issuances by providing same-day liquidity at a highly competitive rate. This facility includes an accordion feature that allows for expansion up to $1.25 billion.
Pamela McCormack: With adjusted leverage at a modest 2.0 times stable book value and robust liquidity, these results reflect a solid year of solid performance and financial strength. Positioning for long-term growth. Achieving investment-grade status in 2025, with ratings from Moody's and Fitch, significantly enhanced Ladder's access to deeper and more stable capital markets. This achievement lowered our cost of funds and strengthened our liquidity profile. Building on this momentum, we are pleased to see S&P upgrade Ladder to double B plus, just one notch below investment grade. Our $850 million unsecured revolving credit facility remains a cornerstone of our funding strategy, complementing our unsecured bond issuances by providing same-day liquidity at a highly competitive rate. This facility includes an accordion feature that allows for expansion up to $1.25 billion.
Speaker #2: Positioning for long-term growth. Achieving ratings from Moody's and Fitch significantly investment-grade status in 2025 with enhanced Ladder's access to deeper and more stable capital markets.
Speaker #2: This achievement lowered our cost of funds and strengthened our liquidity profile. Building on this momentum, we are pleased to see S&P upgrade Ladder to double grade.
Speaker #2: Our B+ just one notch below investment 850 million dollar unsecured revolving credit facility remains a cornerstone of our funding strategy. Complementing our unsecured bond issuances, by providing same-day liquidity at a highly competitive rate.
Speaker #2: This facility includes an accordion feature that allows for expansion up to—we are pleased to share that we recently secured $400 million of additional commitments to exercise the accordion, with closing anticipated later in the quarter.
Pamela McCormack: We are pleased to share that we recently secured $400 million of additional commitments to exercise the accordion, with closing anticipated later in the quarter. Together, these funding sources enable Ladder to maintain a predominantly unsecured capital structure, operating independently of repo and CLO markets, and position us to capitalize on future opportunities with confidence. Investment and loan portfolio activity. In 2025, we originated $1.4 billion in new loans, our highest annual volume since 2021. The second half of the year was particularly strong, with nearly $950 million in new loan originations, representing our best two-quarter performance in over 3 years.
Pamela McCormack: We are pleased to share that we recently secured $400 million of additional commitments to exercise the accordion, with closing anticipated later in the quarter. Together, these funding sources enable Ladder to maintain a predominantly unsecured capital structure, operating independently of repo and CLO markets, and position us to capitalize on future opportunities with confidence. Investment and loan portfolio activity. In 2025, we originated $1.4 billion in new loans, our highest annual volume since 2021. The second half of the year was particularly strong, with nearly $950 million in new loan originations, representing our best two-quarter performance in over 3 years.
Speaker #2: Together, these funding sources enable Ladder to maintain a predominantly unsecured capital structure operating independently of repo and CLO markets, and position us to capitalize on future opportunities with confidence.
Speaker #2: Investment and loan portfolio activity. In 2025, we originated 1.4 billion dollars in new loans, our highest annual volume since 2021. The second half of the year was particularly strong, with nearly 950 million dollars in new loan originations representing our best two-quarter performance in over three years.
Pamela McCormack: During Q4 alone, we made over $870 million in new investments, including over $400 million in securities, a $25.8 million equity investment, and more than $430 million in new loans at a weighted average spread of 340 basis points. At year-end, our loan portfolio totaled $2.2 billion, representing 42% of total assets. Our investment strategy remains focused on stable income-producing property collateral, primarily multifamily and industrial properties, with no drift on credit quality. Notably, office loan exposure declined from 14% to 11% of total assets by year-end. While we have reduced overall office exposure, we've selectively pursued new investments as capital returns to the sector. In 2025, we made 3 new loans totaling $68 million, collateralized by recently acquired office properties.
Pamela McCormack: During Q4 alone, we made over $870 million in new investments, including over $400 million in securities, a $25.8 million equity investment, and more than $430 million in new loans at a weighted average spread of 340 basis points. At year-end, our loan portfolio totaled $2.2 billion, representing 42% of total assets. Our investment strategy remains focused on stable income-producing property collateral, primarily multifamily and industrial properties, with no drift on credit quality. Notably, office loan exposure declined from 14% to 11% of total assets by year-end. While we have reduced overall office exposure, we've selectively pursued new investments as capital returns to the sector. In 2025, we made 3 new loans totaling $68 million, collateralized by recently acquired office properties.
Speaker #2: quarter alone, we made over 870 During the fourth million dollars in new investments, including over 400 million dollars in securities, a 25.8 million dollar equity investment, and more than 430 million dollars in new loans 340 basis at a weighted average spread of points.
Speaker #2: At year-end, our loan portfolio totaled 2.2 billion dollars, representing 42 percent of total assets. Our investment strategy remains focused on stable income-producing multi-family and industrial properties, with collateral, primarily no drift on credit quality.
Speaker #2: Notably, office loan exposure declined from 14 percent to 11 percent of total assets by year-end. While we have reduced overall office exposure, we've selectively pursued new investments as capital returns to the sector.
Speaker #2: In 2025, we made three new loans totaling $68 million, collateralized by recently acquired office properties. Additionally, and as previously mentioned, we made a $25.8 million investment for a 20 percent non-controlling interest alongside a strong operating partner to acquire a 667,000-square-foot Manhattan office property located just less than one block away from Grand Central Terminal.
Pamela McCormack: Additionally, as previously mentioned, we made a $25.8 million investment for a 20% non-controlling interest alongside a strong operating partner to acquire a 667,000sq ft Manhattan office property located just less than one block away from Grand Central Terminal. Momentum has carried into 2026 as acquisition activity improves in the commercial real estate market. We've already closed over $250 million in new loans, with more than $450 million under application and in closing. Securities portfolio. During the fourth quarter, we acquired $413 million of primarily triple-A rated commercial real estate securities. As of year-end, the securities portfolio totaled $2.1 billion, representing 39% of total assets. Real estate portfolio.
Pamela McCormack: Additionally, as previously mentioned, we made a $25.8 million investment for a 20% non-controlling interest alongside a strong operating partner to acquire a 667,000sq ft Manhattan office property located just less than one block away from Grand Central Terminal. Momentum has carried into 2026 as acquisition activity improves in the commercial real estate market. We've already closed over $250 million in new loans, with more than $450 million under application and in closing. Securities portfolio. During the fourth quarter, we acquired $413 million of primarily triple-A rated commercial real estate securities. As of year-end, the securities portfolio totaled $2.1 billion, representing 39% of total assets. Real estate portfolio.
Speaker #2: Momentum has carried into 2026 as acquisition activity improves in the commercial real estate market. We've already closed over 250 application and in closing. Securities portfolio.
Speaker #2: During the fourth quarter, we acquired 413 million dollars of primarily AAA-rated commercial real estate securities. As of year-end, the securities portfolio totaled 2.1 billion dollars, representing 39 percent of total assets.
Speaker #2: Real estate portfolio. Our 966 million dollar real estate portfolio delivered consistent performance in 2025, generating 14.8 million dollars of net operating income in the fourth quarter and 57.3 million dollars for the full year.
Pamela McCormack: Our $966 million real estate portfolio delivered consistent performance in 2025, generating $14.8 million of net operating income in Q4 and $57.3 million for the full year. This steady income was supported by active leasing and proactive asset management, which improved both occupancy and overall portfolio stability throughout the year. Capital structure and liquidity. In 2025, we issued our inaugural $500 million investment grade unsecured bond at a fixed rate of 5.5%, with pricing tightening from 200 basis points over Treasuries to 167 basis points at issuance.
Pamela McCormack: Our $966 million real estate portfolio delivered consistent performance in 2025, generating $14.8 million of net operating income in Q4 and $57.3 million for the full year. This steady income was supported by active leasing and proactive asset management, which improved both occupancy and overall portfolio stability throughout the year. Capital structure and liquidity. In 2025, we issued our inaugural $500 million investment grade unsecured bond at a fixed rate of 5.5%, with pricing tightening from 200 basis points over Treasuries to 167 basis points at issuance.
Speaker #2: This steady income was supported by active leasing and proactive both occupancy and overall portfolio asset management, which improved stability throughout the year. Capital structure and liquidity.
Speaker #2: In 2025, we issued our inaugural $500 million investment-grade unsecured bond at a fixed rate of 5.5 percent, with pricing tightening from 200 basis points over Treasuries at issuance to 167 basis points.
Speaker #2: Since then, our bonds have tightened by over 60 basis points, to approximately 100 basis points over Treasuries. Outpacing comparably rated equity REIT bonds by nearly two times, and distinguishing us from higher-leveraged mortgage REITs and property REITs with first-loss exposure.
Pamela McCormack: Since then, our bonds have tightened by over 60 basis points to approximately 100 basis points over Treasuries, outpacing comparably rated Equity REIT bonds by nearly 2 times and distinguishing us from higher leverage mortgage REITs and property REITs with first loss exposure. Historically, Commercial Mortgage REITs face skepticism from bondholders and shareholders of traditional Equity REITs due to concerns over leverage composition, external management, and limited insider ownership. Ladder stands apart. We offer a differentiated investment proposition, an Investment Grade, internally managed company with management and the board owning over 11% of the public company, a portfolio comprised of senior secured assets and a capital structure anchored by unsecured debt with conservative leverage of 2 to 3 times. As of year-end, 71% of our debt was unsecured, and 81% of our assets were unencumbered.
Pamela McCormack: Since then, our bonds have tightened by over 60 basis points to approximately 100 basis points over Treasuries, outpacing comparably rated Equity REIT bonds by nearly 2 times and distinguishing us from higher leverage mortgage REITs and property REITs with first loss exposure. Historically, Commercial Mortgage REITs face skepticism from bondholders and shareholders of traditional Equity REITs due to concerns over leverage composition, external management, and limited insider ownership. Ladder stands apart. We offer a differentiated investment proposition, an Investment Grade, internally managed company with management and the board owning over 11% of the public company, a portfolio comprised of senior secured assets and a capital structure anchored by unsecured debt with conservative leverage of 2 to 3 times. As of year-end, 71% of our debt was unsecured, and 81% of our assets were unencumbered.
Speaker #2: Historically, commercial mortgage REITs face skepticism from bondholders and shareholders of traditional equity REITs due to concerns over leverage composition, external management, and limited insider ownership.
Speaker #2: stands apart. We offer a differentiated investment Ladder proposition, an investment grade, internally managed company, with management in the board owning over 11 percent of the public company, a portfolio comprised of senior secured assets, and a capital structure anchored by unsecured debt times.
Speaker #2: As of with conservative leverage of 2 to 3 year-end, 71 percent of our debt was unsecured, and 81 percent of our assets were unencumbered.
Speaker #2: We maintain 608 million dollars in liquidity, including 570 million dollars of unjoined capacity or unsecured revolver. Having now converted traditional equity REIT bondholders we believe we offer a meaningful alternative to traditional equity REIT shareholders as well.
Pamela McCormack: We maintained $608 million in liquidity, including $570 million of undrawn capacity on our unsecured revolver. Having now converted traditional equity REIT bondholders, we believe we offer a meaningful alternative to traditional equity REIT shareholders as well, by providing a clear and compelling value proposition for investors seeking stability, alignment, and attractive risk-adjusted returns. Building on our momentum, our focus now shifts to loan origination and earnings growth as the primary catalyst driving our story forward. With this stronger narrative, we aim to attract high-quality equity REIT shareholders, aligning our valuation with equity REIT peers to further reduce our cost of capital. In closing, 2025 was a landmark year for Ladder. We achieved investment grade ratings, enhanced our capital structure, and delivered consistent performance across our portfolio.
Pamela McCormack: We maintained $608 million in liquidity, including $570 million of undrawn capacity on our unsecured revolver. Having now converted traditional equity REIT bondholders, we believe we offer a meaningful alternative to traditional equity REIT shareholders as well, by providing a clear and compelling value proposition for investors seeking stability, alignment, and attractive risk-adjusted returns. Building on our momentum, our focus now shifts to loan origination and earnings growth as the primary catalyst driving our story forward. With this stronger narrative, we aim to attract high-quality equity REIT shareholders, aligning our valuation with equity REIT peers to further reduce our cost of capital. In closing, 2025 was a landmark year for Ladder. We achieved investment grade ratings, enhanced our capital structure, and delivered consistent performance across our portfolio.
Speaker #2: By providing a clear and compelling value proposition for investors seeking stability, alignment, and attractive risk-adjusted returns. Building on our momentum, our focus now shifts to loan origination and earnings growth as the primary catalyst driving our story forward.
Speaker #2: With this stronger narrative, we aim to attract high-quality equity REIT shareholders aligning our valuation with equity REIT peers to further reduce our cost of capital.
Pamela McCormack: In 2026, we plan to drive growth by increasing loan originations to enhance returns, support dividend growth, and create shareholder value, all while maintaining the balance sheet discipline that defines Ladder. Thank you to our investors for your continued support and to our team for their dedication throughout this transformative year. With that, I'll turn the call over to Paul.
Pamela McCormack: In 2026, we plan to drive growth by increasing loan originations to enhance returns, support dividend growth, and create shareholder value, all while maintaining the balance sheet discipline that defines Ladder. Thank you to our investors for your continued support and to our team for their dedication throughout this transformative year. With that, I'll turn the call over to Paul.
Speaker #2: To our team for their dedication throughout this transformative year. With that, Paul. Good morning, and thank you, Pamela. Expanding on the topics Pamela highlighted, I'll be providing additional detail on our operating performance and strategic positioning as 2026 begins. I'll turn the call over to
Paul Miceli: Good morning, and thank you, Pamela. Expanding on the topics Pamela highlighted, I'll be providing additional detail on our operating performance and strategic positioning as 2026 begins. During Q4, Ladder generated distributable earnings of $21.4 million, or $0.17 per share. Excluding a realized loan loss previously reserved for, our Q4 earnings were $0.21 per share. In 2025, we achieved our long-standing goal of attaining investment-grade credit ratings, as Moody's upgraded Ladder to Baa3 and Fitch to BBB-, with S&P upgrading Ladder to BB+ in January, subsequent to year-end. Ladder is now the only investment grade-rated mortgage REIT, a distinction that underscores our disciplined approach to balance sheet and credit management, prudent leverage, and the durability of our diversified commercial real estate platform.
Paul Miceli: Good morning, and thank you, Pamela. Expanding on the topics Pamela highlighted, I'll be providing additional detail on our operating performance and strategic positioning as 2026 begins. During Q4, Ladder generated distributable earnings of $21.4 million, or $0.17 per share. Excluding a realized loan loss previously reserved for, our Q4 earnings were $0.21 per share. In 2025, we achieved our long-standing goal of attaining investment-grade credit ratings, as Moody's upgraded Ladder to Baa3 and Fitch to BBB-, with S&P upgrading Ladder to BB+ in January, subsequent to year-end. Ladder is now the only investment grade-rated mortgage REIT, a distinction that underscores our disciplined approach to balance sheet and credit management, prudent leverage, and the durability of our diversified commercial real estate platform.
Speaker #2: During the fourth quarter, Ladder generated distributable earnings of 21.4 million, or 17 cents per previously reserved for our fourth quarter earnings were 21 cents per share.
Speaker #2: In 2025, we achieved our longstanding goal of attaining investment-grade credit ratings. As Moody's upgraded Ladder to BAA3 and Fitch to BBB+ in January, subsequent to year-end.
Speaker #2: Ladder is now the only investment-grade rated mortgage REIT, a distinction that underscores our disciplined approach to balance sheet and credit management, prudent leverage, and the durability of our diversified commercial real estate platform.
Speaker #2: These ratings enhance our access to investment-grade capital, a tighter spreads, validate our commitment to the use of unsecured debt to finance our balance sheet, and overall further solidify Ladder's industry leadership.
Paul Miceli: These ratings enhance our access to investment-grade capital at tighter spreads, validate our commitment to the use of unsecured debt to finance our balance sheet, and overall further solidify Ladder's industry leadership. In July 2025, we issued $500 million of senior unsecured notes maturing in 2030 at a 5.5% coupon, representing a 167 basis point spread over the benchmark Treasury. This transaction was oversubscribed by more than 5.5 times, with orders exceeding $3.5 billion, executing at the tightest spread in Ladder's history. This transaction firmly established Ladder in the investment-grade bond market, expanding our access to a deeper, more stable pool of capital.
Paul Miceli: These ratings enhance our access to investment-grade capital at tighter spreads, validate our commitment to the use of unsecured debt to finance our balance sheet, and overall further solidify Ladder's industry leadership. In July 2025, we issued $500 million of senior unsecured notes maturing in 2030 at a 5.5% coupon, representing a 167 basis point spread over the benchmark Treasury. This transaction was oversubscribed by more than 5.5 times, with orders exceeding $3.5 billion, executing at the tightest spread in Ladder's history. This transaction firmly established Ladder in the investment-grade bond market, expanding our access to a deeper, more stable pool of capital.
Speaker #2: In July of 2025, we issued 500 million dollars of senior unsecured notes maturing in 2030 coupon, representing a 167 basis point spread over the benchmark Treasury.
Speaker #2: This transaction was oversubscribed by more than 5.5 times, with orders exceeding 3.5 billion dollars, executing at the tightest spread in Ladder's history. This transaction firmly established Ladder and the investment-grade bond market, expanding our access to a deeper, more stable pool of capital.
Speaker #2: As Pamela mentioned, but is worth repeating, the bond has continued to perform well in the secondary market, trading as tight as 100 basis points over Treasury since leverage ratio was 2.0 times, and we maintained a robust liquidity of 608 million dollars, including 570 million dollars of revolver capacity.
Paul Miceli: As Pamela mentioned, but is worth repeating, the bond has continued to perform well in the secondary market, trading as tight as 100 basis points over Treasury since closing. As of year-end, our adjusted leverage ratio was 2.0 times, and we maintained a robust liquidity of $608 million, including $570 million of revolver capacity. Our unencumbered asset pool represented 81% of total assets as of 31 December 2025, of which 87% was comprised of first mortgage loans, investment-grade securities, and unrestricted cash and cash equivalents, providing a significant balance sheet flexibility. As of 31 December 2025, Ladder's undepreciated book value per share was $13.69, which is net of 37 cents per share of CECL reserve established.
Paul Miceli: As Pamela mentioned, but is worth repeating, the bond has continued to perform well in the secondary market, trading as tight as 100 basis points over Treasury since closing. As of year-end, our adjusted leverage ratio was 2.0 times, and we maintained a robust liquidity of $608 million, including $570 million of revolver capacity. Our unencumbered asset pool represented 81% of total assets as of 31 December 2025, of which 87% was comprised of first mortgage loans, investment-grade securities, and unrestricted cash and cash equivalents, providing a significant balance sheet flexibility. As of 31 December 2025, Ladder's undepreciated book value per share was $13.69, which is net of 37 cents per share of CECL reserve established.
Speaker #2: Our unencumbered asset pool represented 81 percent of total assets as of December 31, 2025, of which 87 percent was comprised of first mortgage loans investment-grade securities and unrestricted cash and cash equivalents, providing a significant balance sheet flexibility.
Speaker #2: As of December 31, 2025, Ladder's undepreciated book value per share was $0.1369, which is net of $0.37 per share of CECL reserve established.
Speaker #2: In the fourth quarter of 2025, we repurchased 928,000 dollars of common stock, or 88,000 shares, at a weighted average share price of 10.57 cents, repurchased 10.2 million dollars of common and in total in 2025, we stock, or 965,000 shares, at a weighted average share price of 10.60 cents.
Paul Miceli: In Q4 2025, we repurchased $928,000 of common stock, or 88,000 shares, at a weighted average share price of $10.57. In total, in 2025, we repurchased $10.2 million of common stock, or 965,000 shares, at a weighted average share price of $10.60. As of 31 December 2025, $90.6 million remains outstanding on Ladder's stock repurchase program. In Q4, Ladder declared a $0.23 per share dividend, which was paid on 15 January 2026. For the full year, we achieved 96% dividend coverage, excluding the loan write-off, while simultaneously allowing our loan portfolio to grow following a record year of paydowns in 2024.
Paul Miceli: In Q4 2025, we repurchased $928,000 of common stock, or 88,000 shares, at a weighted average share price of $10.57. In total, in 2025, we repurchased $10.2 million of common stock, or 965,000 shares, at a weighted average share price of $10.60. As of 31 December 2025, $90.6 million remains outstanding on Ladder's stock repurchase program. In Q4, Ladder declared a $0.23 per share dividend, which was paid on 15 January 2026. For the full year, we achieved 96% dividend coverage, excluding the loan write-off, while simultaneously allowing our loan portfolio to grow following a record year of paydowns in 2024.
Speaker #2: As of December 31, 2025, 90.6 million dollars remains outstanding on Ladder stock repurchase program. In the fourth quarter, Ladder declared a 23 cent per share dividend, which was paid on January 15, 2026.
Speaker #2: For the full year, we achieved 96 percent dividend coverage, excluding the loan write-off. While simultaneously allowing our loan portfolio to grow following a record year of paydowns in 2024.
Speaker #2: Our dividend remained stable, reflecting the strength of our balance sheet and our ability to grow earnings as our asset-based transitions into newly originated loans and reaches full capacity.
Paul Miceli: Our dividend remains stable, reflecting the strength of our balance sheet and our ability to grow earnings as our asset base transitions into newly originated loans and reaches full capacity. Furthermore, as our investment-grade story continues to gain traction, we see potential for our dividend yield to tighten relative to other investment-grade REITs with comparable credit ratings, further underscoring the value of our differentiated model. Building on Pamela's overview of our performance, I will highlight a few additional insights on how each of our segments fared for Q4. As of 31 December 2025, our loan portfolio totaled $2.2 billion, with a weighted average yield of 7.8%.
Paul Miceli: Our dividend remains stable, reflecting the strength of our balance sheet and our ability to grow earnings as our asset base transitions into newly originated loans and reaches full capacity. Furthermore, as our investment-grade story continues to gain traction, we see potential for our dividend yield to tighten relative to other investment-grade REITs with comparable credit ratings, further underscoring the value of our differentiated model. Building on Pamela's overview of our performance, I will highlight a few additional insights on how each of our segments fared for Q4. As of 31 December 2025, our loan portfolio totaled $2.2 billion, with a weighted average yield of 7.8%.
Speaker #2: Furthermore, as our investment-grade story continues to gain traction, we see potential for our dividend yield to tighten relative to other investment-grade REITs, a comparable credit ratings, further underscoring the value of our differentiated model.
Speaker #2: Building on Pamela's overview of our performance, I will highlight a few additional insights into how each of our segments fared for the fourth quarter.
Speaker #2: As of December 31, 2025, our loan portfolio totaled $2.2 billion, with a weighted average yield of 7.8 percent. As of year-end, four loans totaling $129.7 million, or 2.5 percent of total assets, were on non-accrual.
Paul Miceli: As of year-end, 4 loans totaling $129.7 million, or 2.5% of total assets, were on nonaccrual, including 1 loan added in Q4, collateralized by an office property in Portland, Oregon, the Weatherly Building. The loan has a carrying value of $5.8 million, or $88 per square foot, which is net of a $5 million loan loss reserve realized in Q4. Subsequent to year-end, we resolved 1 nonaccrual loan with a $61 million carrying value through foreclosure. The loan is collateralized by a 3-property, 158-unit multifamily portfolio in the Harlem neighborhood of New York City, with 60 parking spaces built and built between 2017 and 2020. The properties are currently 87% occupied and generate healthy net operating income.
Paul Miceli: As of year-end, 4 loans totaling $129.7 million, or 2.5% of total assets, were on nonaccrual, including 1 loan added in Q4, collateralized by an office property in Portland, Oregon, the Weatherly Building. The loan has a carrying value of $5.8 million, or $88 per square foot, which is net of a $5 million loan loss reserve realized in Q4. Subsequent to year-end, we resolved 1 nonaccrual loan with a $61 million carrying value through foreclosure. The loan is collateralized by a 3-property, 158-unit multifamily portfolio in the Harlem neighborhood of New York City, with 60 parking spaces built and built between 2017 and 2020. The properties are currently 87% occupied and generate healthy net operating income.
Speaker #2: Including one loan added in the fourth quarter, collateralized by an office property in Portland, Oregon, the Weatherly Building. The loan has a carrying value of 5.8 million dollars, or 88 dollars per square foot, which is net of a 5 million dollar loan loss reserve, realized in the fourth quarter.
Speaker #2: Subsequent to year-end, we resolved one non-accrual loan with a 61 million dollar carrying value, through foreclosure. The loan is collateralized by a three-property, 158-unit multifamily portfolio in the Harlem neighborhood of New York City, with 60 parking spaces built between 2017 and 2020.
Speaker #2: The properties are currently 87 percent occupied and generate healthy net operating income. Our Cecil Reserve otherwise remained steady at 47 million dollars, or 37 cents per share.
Paul Miceli: Our CECL reserve otherwise remains steady at $47 million or $0.37 per share. Taking into consideration the continued ongoing macroeconomic shift in the US and global economy, we believe this reserve level is sufficient to cover any potential losses in our loan portfolio. Ladder CECL reserve level has been, and we believe will continue to be, the result of a disciplined approach to credit risk management, allowing us to remain well-positioned to navigate market challenges while protecting shareholder value. As of 31 December 2025, our securities portfolio totaled $2.1 billion, with a weighted average yield of 5.3%. Notably, 99% of the portfolio was investment grade-rated, and 97% was AAA-rated, underscoring its high credit quality.
Paul Miceli: Our CECL reserve otherwise remains steady at $47 million or $0.37 per share. Taking into consideration the continued ongoing macroeconomic shift in the US and global economy, we believe this reserve level is sufficient to cover any potential losses in our loan portfolio. Ladder CECL reserve level has been, and we believe will continue to be, the result of a disciplined approach to credit risk management, allowing us to remain well-positioned to navigate market challenges while protecting shareholder value. As of 31 December 2025, our securities portfolio totaled $2.1 billion, with a weighted average yield of 5.3%. Notably, 99% of the portfolio was investment grade-rated, and 97% was AAA-rated, underscoring its high credit quality.
Speaker #2: Taking into consideration the continued ongoing macroeconomic shifts in the U.S. and global economy, we believe this reserve level is sufficient to cover any potential losses in our loan portfolio.
Speaker #2: Ladder Cecil Reserve level has been and we believe will continue to be the result of a disciplined approach to credit risk management, allowing us to remain well-positioned to navigate market challenges, while protecting shareholder value.
Speaker #2: As of December 31, 2025, our securities portfolio totaled 2.1 billion dollars, with a weighted average yield of 5.3 percent. Notably, 99 percent of the portfolio was investment-grade rated, and 97 percent was AAA rated, underscoring its high credit quality.
Speaker #2: As of year-end, billion of our securities portfolio remained unencumbered. Providing an additional source of approximately 66 percent, or 1.4 liquidity for Ladder, complementing our same-day liquidity of 608 million dollars, and reinforcing our strong balance sheet and ability to focus on offense.
Paul Miceli: As of year-end, approximately 66% or $1.4 billion of our securities portfolio remains unencumbered, providing an additional source of liquidity for Ladder, complementing our same-day liquidity of $608 million and reinforcing our strong balance sheet and ability to focus on offense. In 2025, our $966 million real estate segment continued to generate stable net operating income. The portfolio includes 149 net lease properties, comprised of primarily investment-grade credits committed to long-term leases, with an average lease term of 6.7 years. For further details of our Q4 and full year 2025 operating results, please refer to our earnings supplement presentation available on our website and our annual report on Form 10-K, which we expect to file in the coming days.
Paul Miceli: As of year-end, approximately 66% or $1.4 billion of our securities portfolio remains unencumbered, providing an additional source of liquidity for Ladder, complementing our same-day liquidity of $608 million and reinforcing our strong balance sheet and ability to focus on offense. In 2025, our $966 million real estate segment continued to generate stable net operating income. The portfolio includes 149 net lease properties, comprised of primarily investment-grade credits committed to long-term leases, with an average lease term of 6.7 years. For further details of our Q4 and full year 2025 operating results, please refer to our earnings supplement presentation available on our website and our annual report on Form 10-K, which we expect to file in the coming days.
Speaker #2: In 2025, our 966 million dollar real estate segment continued to generate stable net operating income. The portfolio includes 149 net lease properties, comprised of primarily investment-grade credits, committed to long-term leases, with average lease term of 6.7 years.
Speaker #2: For further details of our fourth quarter and full-year 2025 operating results, please refer to our earnings supplement presentation available on our website and our annual report on Form 10-K, which we expect to file in the coming days.
Speaker #2: With Brian. Thanks, Paul. that, I will turn the call over to 2025 was a pivotal year for us, and we reaffirmed our commitment to an unsecured liability structure after upsizing our revolver and issuing our first investment-grade bond.
Paul Miceli: With that, I will turn the call over to Brian.
Paul Miceli: With that, I will turn the call over to Brian.
Brian Harris: Thanks, Paul. 2025 was a pivotal year for us, and we reaffirmed our commitment to an unsecured liability structure after upsizing our revolver and issuing our first investment-grade bond. With predominantly unsecured debt now at attractive borrowing costs, we expect 2026 to be a year where we complete our business plan to grow our loan portfolio along with our earnings. We've already begun to grow our asset base, increasing it by 16% in the second half of 2025 and 10% in the fourth quarter. Our growth in assets has been partially offset by large payoffs in our loan portfolio over the last two years, with $1.7 billion in payoffs in 2024 and $608 million in 2025.
Brian Harris: Thanks, Paul. 2025 was a pivotal year for us, and we reaffirmed our commitment to an unsecured liability structure after upsizing our revolver and issuing our first investment-grade bond. With predominantly unsecured debt now at attractive borrowing costs, we expect 2026 to be a year where we complete our business plan to grow our loan portfolio along with our earnings. We've already begun to grow our asset base, increasing it by 16% in the second half of 2025 and 10% in the fourth quarter. Our growth in assets has been partially offset by large payoffs in our loan portfolio over the last two years, with $1.7 billion in payoffs in 2024 and $608 million in 2025.
Speaker #2: With predominantly unsecured debt now, it attracted borrowing costs, we expect 2026 to be a year where we complete our business plan to grow our loan portfolio along with our earnings.
Speaker #2: We've already begun to grow our asset base, increasing it by 16 percent in the second half of 2025 and 10 percent in the fourth quarter.
Speaker #2: Our partially offset by large payoffs in our loan portfolio over the last two years. With 1.7 billion in payoffs in 2024 and 608 million in 2025, but I would note that in the fourth quarter of 2025, we received only 107 million in payoffs, our lowest quarterly total in the last two years.
Brian Harris: But I would note that in Q4 2025, we received only $107 million in payoffs, our lowest quarterly total in the last two years. With payoffs slowing, our accelerating loan originations become more visible as growth in our loan book takes center stage. We originated $511 million in new loans in Q3 and $433 million in Q4, with an additional $251 million originated in January 2026. This totals $1.2 billion of new loan originations over the last seven months. Turning to our securities portfolio, in 2025, we successfully reallocated capital from T-Bills into AAA securities, increasing our holdings by over 90% to $2.1 billion, despite taking in $535 million in paydowns.
Brian Harris: But I would note that in Q4 2025, we received only $107 million in payoffs, our lowest quarterly total in the last two years. With payoffs slowing, our accelerating loan originations become more visible as growth in our loan book takes center stage. We originated $511 million in new loans in Q3 and $433 million in Q4, with an additional $251 million originated in January 2026. This totals $1.2 billion of new loan originations over the last seven months. Turning to our securities portfolio, in 2025, we successfully reallocated capital from T-Bills into AAA securities, increasing our holdings by over 90% to $2.1 billion, despite taking in $535 million in paydowns.
Speaker #2: With payoffs slowing, our accelerating loan originations become more visible as growth in our loan book takes center stage. We originated 511 million dollars in new loans in the third quarter and 433 million in the fourth quarter.
Speaker #2: additional 251 With an million originated in January of 2026. This totals 1.2 billion last seven months. Turning to our securities portfolio, dollars of new loan originations over the in 2025 we successfully reallocated capital from T-bills into AAA securities increasing our holdings by over 90 percent to 2.1 billion dollars despite taking in 535 million dollars in paydowns.
Speaker #2: We expect our securities portfolio to continue to experience robust paydowns as capital markets have become more constructive around refinancing commercial mortgage loans, and issuers exercise cleanup calls due to deleveraging of AAA classes.
Brian Harris: We expect our securities portfolio to continue to experience robust paydowns as capital markets have become more constructive around refinancing commercial mortgage loans and issuers exercise cleanup calls due to deleveraging of AAA classes. This is the class we have a preference for, as seen in our holdings. We expect to use the proceeds from these paydowns in our securities book, combined with the sales of securities and our access to unsecured capital, to provide much of the liquidity needed to fund our growing loan origination pipeline. This plan is not new. It is simply an illustration of the business plan we outlined last year. We believe it was critical to prepare the company's liability complex for the loan growth we've been expecting, and we're now seeing this play out in real time.
Brian Harris: We expect our securities portfolio to continue to experience robust paydowns as capital markets have become more constructive around refinancing commercial mortgage loans and issuers exercise cleanup calls due to deleveraging of AAA classes. This is the class we have a preference for, as seen in our holdings. We expect to use the proceeds from these paydowns in our securities book, combined with the sales of securities and our access to unsecured capital, to provide much of the liquidity needed to fund our growing loan origination pipeline. This plan is not new. It is simply an illustration of the business plan we outlined last year. We believe it was critical to prepare the company's liability complex for the loan growth we've been expecting, and we're now seeing this play out in real time.
Speaker #2: This is the class we have a preference for, as seen in our holdings. We expect to use the proceeds from these paydowns in our securities book combined with the sales of securities and our access to unsecured capital to provide much of the liquidity needed to fund our growing loan origination pipeline.
Speaker #2: new. It is simply an illustration of the This plan is not business plan we outlined last year. We believe it was critical complex for the loan growth we've been expecting and we're now seeing this play out in real time.
Speaker #2: While we will always be on the lookout for opportunities to improve our cost of funds, we believe most of our efforts in the year ahead will be focused on to prepare the companies' liability growth in our loan portfolio and, by extension, earnings.
Brian Harris: While we will always be on the lookout for opportunities to improve our cost of funds, we believe most of our efforts in the year ahead will be focused on growth in our loan portfolio and, by extension, earnings. We think we are well positioned to take advantage of the lending opportunities we see emerging. Rising stock prices and a more balanced liquidity picture in commercial real estate markets should provide Ladder with many opportunities in the year ahead. Our diversified mix of investments has weathered the storm felt in the CRE markets as rates rose quickly after being near zero for years. We believe our stable book value over the last several years has validated our credit acumen, along with our multi-cylinder approach towards allocation of capital. Now, fully on offense, we plan to grow our earnings over time and our book value. We can take some questions now.
Brian Harris: While we will always be on the lookout for opportunities to improve our cost of funds, we believe most of our efforts in the year ahead will be focused on growth in our loan portfolio and, by extension, earnings. We think we are well positioned to take advantage of the lending opportunities we see emerging. Rising stock prices and a more balanced liquidity picture in commercial real estate markets should provide Ladder with many opportunities in the year ahead. Our diversified mix of investments has weathered the storm felt in the CRE markets as rates rose quickly after being near zero for years. We believe our stable book value over the last several years has validated our credit acumen, along with our multi-cylinder approach towards allocation of capital. Now, fully on offense, we plan to grow our earnings over time and our book value. We can take some questions now.
Speaker #2: We think we are opportunities we see emerging. Rising well-positioned to take advantage of the lending stock prices and a more balanced liquidity picture in commercial real estate markets should provide Ladder with many opportunities in the year ahead.
Speaker #2: Our diversified mix of investments has weathered the storm felt in the CRE markets as rates rose quickly after being near zero for years. We believe our stable book value over the last several years has validated our credit acumen, along with our multi-cylinder approach towards allocation of capital.
Speaker #2: Now fully on offense, we plan to grow our earnings over time and our book value. We can take some questions
Speaker #2: now. Thank
Speaker #3: At this time, we will be conducting a question-and-answer session. If you'd like to ask a question, please press star one on your telephone keypad.
Operator: Thank you. At this time, we'll be conducting a question-and-answer session. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Our first question comes from Jade Rahmani with KBW. Your line is now live.
Operator: Thank you. At this time, we'll be conducting a question-and-answer session. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Our first question comes from Jade Rahmani with KBW. Your line is now live.
Speaker #3: A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue.
Speaker #3: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions.
Speaker #3: Our first question comes from Jade Rahmani with KBW. Your line is now
Speaker #4: Thanks very much.
Jade Rahmani: Thanks very much. 2026 seems to be off to a pretty volatile start, and there are jitters in sectors of the economy around the impact of AI on key areas, all the CapEx spend Big Tech is targeting, and volatilities in interest rates. At the same time, CRE loan spreads have continued to tighten. So just wanted to start off by asking if Ladder's planning to do anything different in light of the potential volatility.
Jade Rahmani: Thanks very much. 2026 seems to be off to a pretty volatile start, and there are jitters in sectors of the economy around the impact of AI on key areas, all the CapEx spend Big Tech is targeting, and volatilities in interest rates. At the same time, CRE loan spreads have continued to tighten. So just wanted to start off by asking if Ladder's planning to do anything different in light of the potential volatility.
Speaker #4: 2026 seems to be off to a pretty live. volatile start, and there are jitters in sectors of the economy around the impact of AI on key areas.
Speaker #4: All the CapEx spend, big tech is targeting, and volatility is in interest rates at the same time. CRE loan spreads have continued to tighten, so just wanted to start off by asking if Ladder's planning to do anything different in light of the potential
Speaker #4: volatility.
Brian Harris: This is Brian Harris. Thanks for the question. I don't think we're planning to do anything differently in, given the volatility. It's been pretty volatile, although, in the beginning of almost every year, spreads tend to tighten after the stock market has hit some records in the at the end of the year before because I think there's rebalancing, and I think the insurance companies have fresh allocations of capital that are usually larger than the one before, because of the stock market, rebalancing. But, we're not overly impacted by that. We, we are not a fan of data centers as far as, calling them real estate assets. So we, we weren't doing that before, so I don't think we're going to do it now.
Speaker #2: This is Brian J. Thanks for the question.
Brian Harris: This is Brian Harris. Thanks for the question. I don't think we're planning to do anything differently in, given the volatility. It's been pretty volatile, although, in the beginning of almost every year, spreads tend to tighten after the stock market has hit some records in the at the end of the year before because I think there's rebalancing, and I think the insurance companies have fresh allocations of capital that are usually larger than the one before, because of the stock market, rebalancing. But, we're not overly impacted by that. We, we are not a fan of data centers as far as, calling them real estate assets. So we, we weren't doing that before, so I don't think we're going to do it now.
Speaker #2: I don't think we're planning to do anything differently given the volatility. It's been pretty volatile, although in the beginning of almost every year, spreads tend to tighten after the stock market has hit some records in at the end of the year before.
Speaker #2: Because I think there’s rebalancing, and I think the insurance companies have fresh allocations of capital that are usually larger than the one before because of the stock market rebalancing.
Speaker #2: But we're not overly impacted by that. We are not a fan of data centers as far as calling them real estate assets. So we weren't doing that before, so I don't think we're going to do it now.
Brian Harris: I do think that a lot of the private credit lenders in the CLO market on corporates below Investment Grade, you know, they may be impacted more by that, and I think naturally you get dragged when you're in some ETFs with them. But overall, no, I don't anticipate it. If anything, I think if the market is getting concerned about the spend on AI and data centers, you know, there's probably a place in the world for a safe dividend that is based on bricks and mortar, and utility for, you know, normal, everyday people, as opposed to the next great wave of technology.
Speaker #2: I do think that a lot of the private market on corporates credit lenders in the CLO below investment grade, you know, they may be impacted more by that.
Brian Harris: I do think that a lot of the private credit lenders in the CLO market on corporates below Investment Grade, you know, they may be impacted more by that, and I think naturally you get dragged when you're in some ETFs with them. But overall, no, I don't anticipate it. If anything, I think if the market is getting concerned about the spend on AI and data centers, you know, there's probably a place in the world for a safe dividend that is based on bricks and mortar, and utility for, you know, normal, everyday people, as opposed to the next great wave of technology.
Speaker #2: you get dragged when you're in some And I think naturally ETFs with them. it. If anything, I But overall, no, I don't anticipate getting concerned about the spend think if the market is on AI and data centers, you know, there is probably a place in the world for a safe dividend that is based on bricks and mortar.
Speaker #2: And utility for, you know, normal everyday people as opposed to the next great wave of technology. So I don't think this volatility does anything for to us other than present opportunities because I think that a lot of the big operations, the big asset managers will sit down and decide, you know, how they want to allocate capital here.
Brian Harris: So I don't think this volatility does anything to us other than present opportunities, because I think that a lot of the big operations, the big asset managers, will sit down and decide, you know, how they wanna allocate capital here. And of course, they'll pull the real estate guys into that conversation, too. But at Ladder, we're independent. We're not having any trouble with this.
Brian Harris: So I don't think this volatility does anything to us other than present opportunities, because I think that a lot of the big operations, the big asset managers, will sit down and decide, you know, how they wanna allocate capital here. And of course, they'll pull the real estate guys into that conversation, too. But at Ladder, we're independent. We're not having any trouble with this.
Speaker #2: And of course, they'll pull the real estate guys into that conversation too. But at any trouble with
Speaker #2: this. Thanks.
Jade Rahmani: Thanks. And in terms of the plan to drive earnings growth and that being the main focus, what ROE do you think is achievable within the current capital structure? And where do you see, you know, maybe the loan portfolio going in size by year-end? And do you plan to grow the real estate equity portfolio?
Jade Rahmani: Thanks. And in terms of the plan to drive earnings growth and that being the main focus, what ROE do you think is achievable within the current capital structure? And where do you see, you know, maybe the loan portfolio going in size by year-end? And do you plan to grow the real estate equity portfolio?
Speaker #3: And in terms of the plan to drive earnings growth and that being the main focus, what ROE do you think is achievable within the current capital structure?
Speaker #3: Loan portfolio going in size by year end? And do you plan to grow?
Brian Harris: I'll try to take those in order, and maybe in backwards order. We do plan to grow the real estate equity portfolio. We've been doing that a little bit more lately than in quarters past. We're selective. We're not just making an overall call on real estate coming back, but there are some opportunities. Typically, when we make an investment, there's a little bit of capital tension involved in the capital allocation of the... It might be the prior lender, it might be the owner, it might be a mezz owner, but we're pretty comfortable making investments, especially when they've been reset on, on the valuations.
Speaker #2: I'll try to
Speaker #2: I'll try to
Brian Harris: I'll try to take those in order, and maybe in backwards order. We do plan to grow the real estate equity portfolio. We've been doing that a little bit more lately than in quarters past. We're selective. We're not just making an overall call on real estate coming back, but there are some opportunities. Typically, when we make an investment, there's a little bit of capital tension involved in the capital allocation of the... It might be the prior lender, it might be the owner, it might be a mezz owner, but we're pretty comfortable making investments, especially when they've been reset on, on the valuations.
Speaker #2: take those in order and maybe in portfolio? backwards order. We do plan to grow the real estate equity portfolio. We've been doing that a the real estate equity in quarters past.
Speaker #2: We're selective. We're not just making an overall call on real estate coming back. There are some opportunities. Typically, when we make an investment, there's a little bit of capital tension involved—it might be the prior lender, it might be the owner, it might be a mezz owner. Maybe a little bit more lately than before.
Speaker #2: But we're pretty comfortable making investments the capital allocation of especially when they've been reset on the valuations. A lot of the buildings we've invested in in New York on the office side, we're investing at levels that these buildings were purchased at 30, 35 years ago.
Brian Harris: A lot of the buildings we've invested in in New York on the office side, we're investing at levels that, you know, these buildings were purchased at 30, 35 years ago. And, just a quick report card, the first one we did in New York, the first, office building we invested in, went from 55% to over 90%, occupancy in, in under a year and a half. So we'll probably refinance that pretty soon, and, that might create some capital too, a capital event. So, yes, we do plan to grow that. As far as the loan portfolio, given our, penchant for lower leverage models, I suspect we can probably get the assets as opposed to loans.
Brian Harris: A lot of the buildings we've invested in in New York on the office side, we're investing at levels that, you know, these buildings were purchased at 30, 35 years ago. And, just a quick report card, the first one we did in New York, the first, office building we invested in, went from 55% to over 90%, occupancy in, in under a year and a half. So we'll probably refinance that pretty soon, and, that might create some capital too, a capital event. So, yes, we do plan to grow that. As far as the loan portfolio, given our, penchant for lower leverage models, I suspect we can probably get the assets as opposed to loans.
Speaker #2: report card, the first one we did in New York, the first office building we invested in went from 55% to over 90% occupancy and under a year and a half.
Speaker #2: So we'll probably refinance that pretty soon. And that might create some capital too capital event. So yes, we do plan to grow that. As far as the loan portfolio, given pension for lower leverage models, I suspect we can our assets as opposed to loans.
Speaker #2: I'm rather agnostic as to how we go about getting to the levels, but I suspect we'll take the portfolio up a little over $6 billion by year-end.
Brian Harris: I'm rather agnostic as to how we go about getting to the levels, but I suspect we'll take the portfolio up a little over $6 billion by year-end. And what was the first part of the question, Jade, if you don't mind?
Brian Harris: I'm rather agnostic as to how we go about getting to the levels, but I suspect we'll take the portfolio up a little over $6 billion by year-end. And what was the first part of the question, Jade, if you don't mind?
Speaker #2: And what was the first part of the question, Jade, if you don't
Speaker #2: mind? ROE. ROE, I would say 9 to 10. And that will largely depend on how much of a resurgence of the conduit comes back.
Jade Rahmani: ROE.
Jade Rahmani: ROE.
Brian Harris: ... ROE, I would say 9 to 10. And that will largely depend on how much of a resurgence of the conduit comes back. You could easily go above that. Some of our real estate may be ready to harvest some gains too. So we may have some one-timers that will drive the ROE higher. Not really anticipating anything getting worse. I think the visibility we have into our portfolio is good enough that I don't see any negative surprises coming our way. We're aware of the, you know, any problems that may exist, and they don't look too bad to us.
Brian Harris: ... ROE, I would say 9 to 10. And that will largely depend on how much of a resurgence of the conduit comes back. You could easily go above that. Some of our real estate may be ready to harvest some gains too. So we may have some one-timers that will drive the ROE higher. Not really anticipating anything getting worse. I think the visibility we have into our portfolio is good enough that I don't see any negative surprises coming our way. We're aware of the, you know, any problems that may exist, and they don't look too bad to us.
Speaker #2: You could easily go above that. Some of our real estate may be ready to harvest some gains too. So we may have some one-timers that will drive the ROE anything getting worse I think higher not really anticipating the visibility we have into our portfolio is good surprises coming our way.
Speaker #2: We're aware of the, you know, any to
Speaker #2: us. Great.
Steven DeLaney: Great. Thanks so much.
Jade Rahmani: Great. Thanks so much.
Speaker #3: Thanks so much.
Speaker #2: Sure.
Brian Harris: Sure.
Brian Harris: Sure.
Operator: Our next question comes from Timothy D'Agostino with B. Riley Securities. Your line is now live.
Operator: Our next question comes from Timothy D'Agostino with B. Riley Securities. Your line is now live.
Speaker #3: Comes from Timothy D'Agostino with B. Riley Securities. Your line is now live.
Speaker #5: Hi, thank you for taking the question. Quarter over quarter, obviously, net interest income ticked down. Looking at top line, interest income, it was about 3.5 million lower.
Timothy D'Agostino: Hi, thank you for taking the question. Quarter-over-quarter, obviously, net interest income ticked down. Looking at top line interest income, it was about $3.5 million lower. Obviously, SoFi has come in over the past couple of months, but I was wondering as well, like, is the pressure at the top line also attributable to maybe loans being funded that were written in Q4 being funded Q1? Just kind of understanding that dynamic a little bit better. Thank you.
Timothy D'Agostino: Hi, thank you for taking the question. Quarter-over-quarter, obviously, net interest income ticked down. Looking at top line interest income, it was about $3.5 million lower. Obviously, SoFi has come in over the past couple of months, but I was wondering as well, like, is the pressure at the top line also attributable to maybe loans being funded that were written in Q4 being funded Q1? Just kind of understanding that dynamic a little bit better. Thank you.
Speaker #5: Obviously, SOFR has come in over the past couple of months, but I was wondering as well, like, is the pressure at the top line also attributable to maybe loans being funded that were written in Q4 being funded in Q1?
Speaker #5: Just kind of understanding that dynamic a little bit
Speaker #5: better.
Speaker #5: Thank you. But if you actually stretch it
Brian Harris: Okay. I think that we had a reasonably good quarter as far as loan originations go in the low 400s, followed by the third quarter in the low 500s. I've always said these can be a little bit lumpy, and then if you just look at a 90-day period, you might get confused. But if you actually stretch it out over a quarter in front and a quarter in back, it actually is a pretty smooth process. We did fund a lot of our loans at the end of December. That was not by design. I don't know why that happened. Maybe people get a little more serious about getting closed before year-end.
Brian Harris: Okay. I think that we had a reasonably good quarter as far as loan originations go in the low 400s, followed by the third quarter in the low 500s. I've always said these can be a little bit lumpy, and then if you just look at a 90-day period, you might get confused. But if you actually stretch it out over a quarter in front and a quarter in back, it actually is a pretty smooth process. We did fund a lot of our loans at the end of December. That was not by design. I don't know why that happened. Maybe people get a little more serious about getting closed before year-end.
Speaker #2: think that we had a Okay. I reasonably good quarter as far as loan
Speaker #2: third quarter in the low 500s. I've always said these 400s. can be a little bit lumpy and Followed by the if you just look at a 90-day period, you might get confused.
Speaker #2: We did fund a lot of our loans at the end of Q4. It actually was a pretty smooth December. That was not by design.
Speaker #2: I don't know why that happened. Maybe people get a little more serious about getting closed before year end. So we didn't really enjoy the net interest income from a lot of our new originations, but we will pick it up in the first quarter.
Brian Harris: So we didn't really enjoy the net interest income from a lot of our new originations, but we will pick it up in Q1. And I think the second thing that happens with net interest income is the payoffs, anything that comes in and pays off. There was only $107 million in Q4. But payoffs tend to have relatively high rates compared to, you know, the newer loans that we're writing. And that's oftentimes because a lot of them have been modified and there's cash flow sweeps, and these things are being refinanced, so.
Brian Harris: So we didn't really enjoy the net interest income from a lot of our new originations, but we will pick it up in Q1. And I think the second thing that happens with net interest income is the payoffs, anything that comes in and pays off. There was only $107 million in Q4. But payoffs tend to have relatively high rates compared to, you know, the newer loans that we're writing. And that's oftentimes because a lot of them have been modified and there's cash flow sweeps, and these things are being refinanced, so.
Speaker #2: And I think the second thing that happens with net interest income is payoffs, anything that comes in and pays off. There was only 107 million dollars in the fourth quarter.
Speaker #2: the see a slight dip from those loans and spread, we're happy to see them go because we've been in very happy with the results generally triage with a few of them and we're on our asset management team is doing a great job of getting capital back into the continue.
Speaker #2: relatively high rates compared But payoffs tend to have to, you know, the newer loans that we're writing. And that's oftentimes because a lot of them have sweeps and these things are being refinanced.
Brian Harris: But the good part is, while we do see a slight dip from those loans and spread, we're happy to see them go because we've been in triage with a few of them, and we're very happy with the results generally on how our asset management team is doing a great job of getting capital back into the building. And we think that'll continue, and we are not having too much trouble anymore finding suitable investments on the outside for new loan originations. So again, I think we'll pick that up as we go on. I think we already had $250 million in the month of January 2026. So again, I don't take too much offense to looking at a one quarter as at a possible dip.
Brian Harris: But the good part is, while we do see a slight dip from those loans and spread, we're happy to see them go because we've been in triage with a few of them, and we're very happy with the results generally on how our asset management team is doing a great job of getting capital back into the building. And we think that'll continue, and we are not having too much trouble anymore finding suitable investments on the outside for new loan originations. So again, I think we'll pick that up as we go on. I think we already had $250 million in the month of January 2026. So again, I don't take too much offense to looking at a one quarter as at a possible dip.
Speaker #2: And we are not having too much trouble anymore finding suitable investments on building. And we think that'll the outside for new loan originations. So again, I think we'll pick that up as we go on.
Speaker #2: I think we already had the month of January 2026. So, again, I don't take too much offense to $250 million in the looking at one quarter at a possible dip.
Speaker #2: I suspect the heavy refinances are over. And so we're now going to be converting a lot of cash out of the unsecured lines as well as our cash positions and sell some securities.
Brian Harris: I suspect the heavy refinances are over, and so we're now gonna be converting a lot of cash out of the unsecured lines, as well as our cash positions, and sell some securities. We will be funding, you know, more loans that have higher yields than the yield that we get them from being the unsecured line, as well as the securities book. The securities book is paying off rather quickly, and that kind of makes sense. Because as the defeasance went on in the commercial real estate refinance market, a lot of loans paid off, and as those loans pay off in those CLOs, the triple A portion dips, you know, and you have large subordination.
Brian Harris: I suspect the heavy refinances are over, and so we're now gonna be converting a lot of cash out of the unsecured lines, as well as our cash positions, and sell some securities. We will be funding, you know, more loans that have higher yields than the yield that we get them from being the unsecured line, as well as the securities book. The securities book is paying off rather quickly, and that kind of makes sense. Because as the defeasance went on in the commercial real estate refinance market, a lot of loans paid off, and as those loans pay off in those CLOs, the triple A portion dips, you know, and you have large subordination.
Speaker #2: We will be funding more loans that have higher yields than the fuel that we get them from being the unsecured line as well as securities book.
Speaker #2: The securities book is paying off rather quickly. And that kind of makes sense because as the defroster went on in the commercial real market, a lot of loans paid off.
Speaker #2: And as those loans pay off in those CLOs, the AAA portion dips and you have large subordination. That happens to be what we own So they're being refinanced into new mostly.
Brian Harris: That happens to be what we own mostly, and they're being called, so they're being refinanced into new CLOs and with old and new loans. So again, very healthy part. So while payments are slowing down, payoffs are slowing down in the loan book, they're picking up in the securities book. And that's right on schedule. There's nothing unusual about that. That's what we're anticipating, and we expect that to continue.
Brian Harris: That happens to be what we own mostly, and they're being called, so they're being refinanced into new CLOs and with old and new loans. So again, very healthy part. So while payments are slowing down, payoffs are slowing down in the loan book, they're picking up in the securities book. And that's right on schedule. There's nothing unusual about that. That's what we're anticipating, and we expect that to continue.
Speaker #2: CLOs. And with old and new loans, so again, very healthy And they're being called. part. So while payments are slowing, debt payoffs are slowing down in the loan book, they're picking up in the securities book.
Speaker #2: And that's right on schedule. There's anticipating. And we expect that to nothing unusual about that. That's what we were continue.
Timothy D'Agostino: Okay, great. Thank you so much. That's all for me.
Timothy D'Agostino: Okay, great. Thank you so much. That's all for me.
Speaker #3: That's
Speaker #3: me. Our next question is from Steve Delaney with JMP Securities. Your line is now Okay, great. Thank you so much.
Operator: Our next question is from Steve Delaney with JMP Securities. Your line is now live.
Operator: Our next question is from Steve Delaney with JMP Securities. Your line is now live.
Steven DeLaney: Thank you. Good morning, everyone. The shift towards a more lending-focused business model moving out into 2026, remaining diversified, but a re-emphasis on lending. When I look at the Commercial Mortgage REIT group, 22 companies, I mean, the losses on bridge loans over the last 3 to 5 years have just been huge. I guess, Brian, when you look back over the last, say, 5 or 6 years, what were the biggest mistakes in underwriting? I mean, just on a very high-level, simplistic term, I guess, what are you going to do in your underwriting of your bridge loans, you know, moving forward, to ensure that we don't have the kind of carnage that we saw with all those post-COVID generation of bridge loans within the industry?
Steven DeLaney: Thank you. Good morning, everyone. The shift towards a more lending-focused business model moving out into 2026, remaining diversified, but a re-emphasis on lending. When I look at the Commercial Mortgage REIT group, 22 companies, I mean, the losses on bridge loans over the last 3 to 5 years have just been huge. I guess, Brian, when you look back over the last, say, 5 or 6 years, what were the biggest mistakes in underwriting? I mean, just on a very high-level, simplistic term, I guess, what are you going to do in your underwriting of your bridge loans, you know, moving forward, to ensure that we don't have the kind of carnage that we saw with all those post-COVID generation of bridge loans within the industry?
Speaker #5: everyone. all from The shift towards a more lending-focused business model moving out into 2026 remaining diversified, but a re-emphasis on lending. When I look at the commercial mortgage rate group, 22 companies, I mean, the losses on bridge loans over the last three to five back over the last, say, guess, Brian, when you look five or six years, what were the biggest mistakes in underwriting?
Speaker #5: I mean, just on a very high level, simplistic term, I guess, what are you going to do and your underwriting of your bridge loans moving forward to ensure that we don't have the kind of carnage that we saw with all those post-COVID generation of bridge loans within the industry?
Speaker #5: Just appreciate your thoughts on lending, different plans, and what those bridge loans look like going forward. Thank you.
Steven DeLaney: Just appreciate your thoughts on lending discipline-
Steven DeLaney: Just appreciate your thoughts on lending discipline-
Brian Harris: Sure.
Steven DeLaney: and what those bridge loans look like going forward. Thank you.
Brian Harris: Sure.
Steven DeLaney: and what those bridge loans look like going forward. Thank you.
Brian Harris: Okay. I'll try to, you know, bare what's in the cupboard here as to the warts and all conversations that we get into sometimes. But I think that many of the losses that occurred across the financial sector really were as a result of a deadly combination of low cap rates, driven by 0 interest rates delivered by the Fed, and plenty of liquidity, as the Fed was making alternative investments. You know, you had to get out of the banks, right? You couldn't keep your money there because there was no return. So it got a little bit undisciplined, as we know, apartment buildings, in particular, were being purchased at 3 caps. And then the other part of that deadly combination I mentioned is rapidly rising interest rates.
Speaker #2: Okay. I'll try to bear what's in the cupboard here as to the
Brian Harris: Okay. I'll try to, you know, bare what's in the cupboard here as to the warts and all conversations that we get into sometimes. But I think that many of the losses that occurred across the financial sector really were as a result of a deadly combination of low cap rates, driven by 0 interest rates delivered by the Fed, and plenty of liquidity, as the Fed was making alternative investments. You know, you had to get out of the banks, right? You couldn't keep your money there because there was no return. So it got a little bit undisciplined, as we know, apartment buildings, in particular, were being purchased at 3 caps. And then the other part of that deadly combination I mentioned is rapidly rising interest rates.
Speaker #2: warts and all conversations that we get into sometimes. But I think that many of the losses that occurred across the financial you. sector really were, as a result of a deadly combination of low cap rates, driven by zero interest rates, delivered by the Fed, and people were lots of liquidity as the Fed was making alternative investments.
Speaker #2: to get out of the banks, right? You couldn't keep your money there because there was no return. So it got a little bit You had undisciplined.
Speaker #2: at three caps. And as we know, apartment And then the other part of that deadly combination I mentioned is rapidly rising interest rates. So whereas a lot expenses and the up, the operating refinance what's required for a debt yield went up a rather easy more.
Brian Harris: So whereas a lot of the rents in those apartment buildings did go up, the operating expenses and the refinance, what's required for a debt yield went up more. So that was a bit of a rather easy to look back and see what happened there. The work from home phenomenon caused some problems, too. I think that there had been maybe a little bit of overinvestment in a lot of cities. As you know, we tended to avoid those, they used to be called gateway cities, where you had, you know, large airports, big population centers, large downtown corporates, and you throw a crime wave into that, and those get into trouble pretty quickly, especially with people that are working from home.
Brian Harris: So whereas a lot of the rents in those apartment buildings did go up, the operating expenses and the refinance, what's required for a debt yield went up more. So that was a bit of a rather easy to look back and see what happened there. The work from home phenomenon caused some problems, too. I think that there had been maybe a little bit of overinvestment in a lot of cities. As you know, we tended to avoid those, they used to be called gateway cities, where you had, you know, large airports, big population centers, large downtown corporates, and you throw a crime wave into that, and those get into trouble pretty quickly, especially with people that are working from home.
Speaker #2: look back and see what happened there. So that was a bit of The work from home phenomenon caused some problems maybe a little bit of too. cities.
Speaker #2: to avoid those they used to be called gateway cities. Where you had large airports, big corporates, and you throw a crime wave into that, and those get people that are working from home.
Speaker #2: I think the largest part of that is over. There's a few cities that are probably still going through it. And listen, if I have to be into trouble pretty quickly, especially with honest, our losses have been de minimis compared to others.
Brian Harris: I think the largest part of that is over. There's a few cities that are probably still going through it. And listen, if I have to be honest, our losses have been de minimis compared to others. However, not compared to our models. We think we made some mistakes, and we wanna make sure we don't make them again. If I had to look back on one theme that I wish we had not done, I think you have to be very careful when you're writing a bridge loan and you're refinancing one of your competitor's bridge loans. Because if the competitor knows more about it than you do, and if it was that good of a loan, he'd keep it. You know, he's just gonna take the payoff and make another loan.
Brian Harris: I think the largest part of that is over. There's a few cities that are probably still going through it. And listen, if I have to be honest, our losses have been de minimis compared to others. However, not compared to our models. We think we made some mistakes, and we wanna make sure we don't make them again. If I had to look back on one theme that I wish we had not done, I think you have to be very careful when you're writing a bridge loan and you're refinancing one of your competitor's bridge loans. Because if the competitor knows more about it than you do, and if it was that good of a loan, he'd keep it. You know, he's just gonna take the payoff and make another loan.
Speaker #2: However, not compared to our models. We think we made some mistakes, and we want to make sure we don't make them again. If I had to look back on one theme that I wish we had not done, I think you have to be very careful when you're writing a bridge loan and you're refinancing one of your competitors' bridge loans.
Speaker #2: Because if the competitor knows more about it than you it. He's just going to take the payoff and make of a loan, keep another loan.
Brian Harris: So if he really liked the loan that you're writing there, you might get into trouble. We got into a couple of loss situations in the office sector. Really minor, though. I mean, I'm pretty happy with the way we underwrote them, but our losses over the years, while quite small relative to the portfolio, we had Wilmington, Delaware, Portland, Oregon, this quarter.
Brian Harris: So if he really liked the loan that you're writing there, you might get into trouble. We got into a couple of loss situations in the office sector. Really minor, though. I mean, I'm pretty happy with the way we underwrote them, but our losses over the years, while quite small relative to the portfolio, we had Wilmington, Delaware, Portland, Oregon, this quarter.
Speaker #2: writing there, you might get So if he really liked the loan that you're into trouble. We got into a situations in the office couple of loss mean, I'm pretty happy with the way we underwrote them.
Speaker #2: But our losses over the years, while quite small relative to had Wilmington, Delaware, Portland, Oregon this quarter. I suspect we will have a small loss on a building in Minneapolis.
Steven DeLaney: Yep.
Steven DeLaney: Yep.
Brian Harris: I suspect we will have a small loss on a building in Minneapolis, and San Francisco has certainly caused its set of problems in these portfolios. But the good part is, Ladder focuses on, oftentimes, on what is called flyover cities, where there are population centers that are quite stable, but most people have never been to those cities. So we do like the Midwest. We've always liked the Southeast. Texas, we're comfortable with in certain places, but you have to always be careful. And when you're the industry leader in volume, which unfortunately a lot of operations try to be, all you're really telling me is you paid more for things than probably anyone else would. And when it whiplashes back at you and goes the other way, you suffer the biggest losses.
Brian Harris: I suspect we will have a small loss on a building in Minneapolis, and San Francisco has certainly caused its set of problems in these portfolios. But the good part is, Ladder focuses on, oftentimes, on what is called flyover cities, where there are population centers that are quite stable, but most people have never been to those cities. So we do like the Midwest. We've always liked the Southeast. Texas, we're comfortable with in certain places, but you have to always be careful. And when you're the industry leader in volume, which unfortunately a lot of operations try to be, all you're really telling me is you paid more for things than probably anyone else would. And when it whiplashes back at you and goes the other way, you suffer the biggest losses.
Speaker #2: And San Francisco has certainly caused its set of problems. In these portfolios, but the good part is latter focuses oftentimes on what is called flyover cities, where there are populations centers that are quite stable, but most people have never been to those cities.
Speaker #2: So, we do like the Midwest. We've always liked the Southeast, Texas—we're comfortable with, in certain places. Careful. Industry leader. And when you're the volume, which unfortunately a lot of operations try to be, all you're really telling me is you... But you have to always be paid more for things than anyone else would.
Speaker #2: And when it whiplashes back at you and goes losses. So you might remember, when we started this company, we were sometimes asked why we don't have support with us during difficult times.
Brian Harris: So you might remember when we started this company, you know, we were sometimes asked why we don't have a big parent company to support us during difficult times. And we call these things kickstand REITs. So you've got giant asset managers with these small REITs. And you know, you saw Apollo recently roll up, you know, sell a loan portfolio to an insurance company internally. We don't have that at Ladder, and so the other side of that is we don't have a parent company suggesting the loans we should be making. And so we're very independent in how we operate and with the insider ownership of the company, it really is people with first and last names making loans.
Brian Harris: So you might remember when we started this company, you know, we were sometimes asked why we don't have a big parent company to support us during difficult times. And we call these things kickstand REITs. So you've got giant asset managers with these small REITs. And you know, you saw Apollo recently roll up, you know, sell a loan portfolio to an insurance company internally. We don't have that at Ladder, and so the other side of that is we don't have a parent company suggesting the loans we should be making. And so we're very independent in how we operate and with the insider ownership of the company, it really is people with first and last names making loans.
Speaker #2: And we call these things kickstand REITs. So you've got giant asset managers with these small REITs. And you saw Apollo recently roll up, sell a loan portfolio to an insurance company that at latter.
Speaker #2: And so the other side of that is we don't have a parent company suggesting the loans we should be making. And so we're a big parent company to very independent in how we operate and with the insider ownership of the company.
Speaker #2: It really is people with first and last names making loans. And if you just look at how our book value has held up relative to what I'll consider our former peer set, we've just internally.
Brian Harris: And if you just look at how our book value has held up relative to what I'll consider our former peer set, we've just done much better. And that doesn't surprise me, after 40 years in the business, I'm proud of it. But on the other hand, we're still quite wary about things that could go wrong. So I think to sum up quickly on your question, I think I'll be much more cautious. We were always cautious, but more cautious on large cities with unionized workforces and a fair amount of crime. I think we'll also be very cautious around refinancing competitor bridge loans that have been on their balance sheet for 3 years, and the obvious question is, well, why aren't they refinancing it? So lessons learned. Thankfully, they weren't learned-
Brian Harris: And if you just look at how our book value has held up relative to what I'll consider our former peer set, we've just done much better. And that doesn't surprise me, after 40 years in the business, I'm proud of it. But on the other hand, we're still quite wary about things that could go wrong. So I think to sum up quickly on your question, I think I'll be much more cautious. We were always cautious, but more cautious on large cities with unionized workforces and a fair amount of crime. I think we'll also be very cautious around refinancing competitor bridge loans that have been on their balance sheet for 3 years, and the obvious question is, well, why aren't they refinancing it? So lessons learned. Thankfully, they weren't learned-
Speaker #2: done much better. And that doesn't surprise me. After 40 years in the business, I'm proud of it. but on the other hand, we're still quite wary And So I think to sum up about things that could go wrong.
Speaker #2: quickly on your question, I think I'll be much more cautious. We were always cautious, but more cautious on unionized workforces. large cities with And a fair amount of competitor bridge loans that have been on their cautious around refinancing balance sheet for three years and the obvious crime.
Speaker #2: question is, well, why aren't they refinancing I think we'll also be very it? So lessons learned. Thankfully, they weren't learned We don't have with anyone dying, but they were learned with However, we still feel unacceptably high.
Speaker #2: question is, well, why aren't they refinancing I think we'll also be very it? So lessons learned. Thankfully, they weren't learned We don't have with anyone dying, but they were learned with However, we still feel like our losses were
Steven DeLaney: Yeah
Brian Harris: Yeah
Brian Harris: with anyone dying, but they were learned with small losses relative to competitors. However, we still feel like our losses were unacceptably high.
Brian Harris: with anyone dying, but they were learned with small losses relative to competitors. However, we still feel like our losses were unacceptably high.
Speaker #3: it. So bridge Got right? You do it.
Speaker #3: it. So bridge Got
Steven DeLaney: Got it. So bridge loans doesn't have to be a four-letter word, right? You do it-
Steven DeLaney: Got it. So bridge loans doesn't have to be a four-letter word, right? You do it-
Brian Harris: No, not at all.
Brian Harris: No, not at all.
Speaker #2: all. No, not at
Speaker #3: All right. Thank you for the—
Steven DeLaney: All right. Thank you for the comments, Brian.
Steven DeLaney: All right. Thank you for the comments, Brian.
Speaker #3: comments, Brian.
Speaker #2: Mm-hmm.
Brian Harris: Mm-hmm.
Brian Harris: Mm-hmm.
Operator: As a reminder, if you'd like to ask a question, please press star one on your telephone keypad. One moment, please, while we poll for questions. Our next question comes from Gabriel Poggi with Raymond James. Your line is now live.
Operator: As a reminder, if you'd like to ask a question, please press star one on your telephone keypad. One moment, please, while we poll for questions. Our next question comes from Gabriel Poggi with Raymond James. Your line is now live.
Speaker #4: reminder, if you'd like to ask a question, please press star one on your telephone keypad. One moment, please, while we poll for question comes from Gabe Pogi questions.
Speaker #4: live.
Speaker #5: Hey, good morning,
Gabriel Poggi: Hey, good morning, everybody. Thanks for taking the time. Brian, I wanted to ask a question, kind of piggybacking what Steve just asked about. Can you talk about the competitive landscape as it pertains to banks, in particular, regional banks getting back in the fray? You guys made 12 loans in Q4 of $340 over, so that's super attractive. But just kind of how you think about the go forward in 2026 with a return of some bank competition, that'd be helpful. Thank you.
Gabe Poggi: Hey, good morning, everybody. Thanks for taking the time. Brian, I wanted to ask a question, kind of piggybacking what Steve just asked about. Can you talk about the competitive landscape as it pertains to banks, in particular, regional banks getting back in the fray? You guys made 12 loans in Q4 of $340 over, so that's super attractive. But just kind of how you think about the go forward in 2026 with a return of some bank competition, that'd be helpful. Thank you.
Speaker #5: everybody. Thanks for taking the time. Brian, I wanted to ask a question kind of
Speaker #5: landscape as it pertains to banks in
Speaker #5: particular, regional banks getting back in the fray? small losses relative to competitors. of 340 over. So that's super Our next with Raymond James. attractive, but just kind of how you think about the
Speaker #5: go-forward in '26 with a return of some bank Your line is now you.
Speaker #5: Thank
Brian Harris: Sure. First of all, the banks are becoming more competitive, yes. However, what we're seeing is they're making more construction loans, and we're very comfortable refinancing properties that are in lease-up and that are brand new. So when I look at the landscape of our loan portfolio and the buildings that secure those loans, they're clearly newer and recently built and much better than the inventory that went into the downturn when interest rates were at zero, where everybody thought they could buy a garden apartment complex from the 1970s and spend a few dollars and raise the rent, and that was gonna be no problem. So we do move to higher ground during periods of volatility, which is why we own Triple A securities as opposed to Triple B securities.
Brian Harris: Sure. First of all, the banks are becoming more competitive, yes. However, what we're seeing is they're making more construction loans, and we're very comfortable refinancing properties that are in lease-up and that are brand new. So when I look at the landscape of our loan portfolio and the buildings that secure those loans, they're clearly newer and recently built and much better than the inventory that went into the downturn when interest rates were at zero, where everybody thought they could buy a garden apartment complex from the 1970s and spend a few dollars and raise the rent, and that was gonna be no problem. So we do move to higher ground during periods of volatility, which is why we own Triple A securities as opposed to Triple B securities.
Speaker #2: becoming more competitive, yes.
Speaker #2: However, what we're seeing
Speaker #2: is they're making more construction loans. And we're very You guys made 12 loans in the fourth quarter comfortable refinancing properties that are in lease up and that are brand new.
Speaker #2: So when I look at the landscape that secure those loans, there are of our loan portfolio and the buildings clearly newer, and recently built, and much, much better than the inventory that went into the downturn when competition. interest rates were at zero.
Speaker #2: So when I look at the landscape that secure those loans, there are of our loan portfolio and the buildings clearly newer, and recently built, and much, much better than the inventory that went into the downturn when competition.
Speaker #2: from the 1970s and spend a few thought they could buy a garden apartment complex dollars and raise the rent, and that was going to be no problem.
Speaker #2: we do move to higher ground during periods of volatility, which is why we own AAA Securities as opposed to BBB Securities. And in addition to that, we make loans on newer
Brian Harris: In addition to that, we make loans on newer properties. The good part now is, almost everything we do has a level that's been reset, and the expectation of the borrower is more sober than it was, you know, when everybody was competing for low cap. If you take a look at the names of the borrowers that show up in a lot of the syndicated loans that got into trouble, and I won't name them here, but I will tell you they're largely absent at Ladder. The reason why is because they were shopping around, asking for 80% to 85% financing, and they had several willing participants in that. We did not.
Brian Harris: In addition to that, we make loans on newer properties. The good part now is, almost everything we do has a level that's been reset, and the expectation of the borrower is more sober than it was, you know, when everybody was competing for low cap. If you take a look at the names of the borrowers that show up in a lot of the syndicated loans that got into trouble, and I won't name them here, but I will tell you they're largely absent at Ladder. The reason why is because they were shopping around, asking for 80% to 85% financing, and they had several willing participants in that. We did not.
Speaker #2: is almost everything we do has a level that's been reset. And the expectation of That'd be helpful.
Speaker #2: the borrower is more properties and with the good part now sober than it was. When everybody was competing for low-cap, if you take a look at the names of the borrowers that show up in a lot of the syndicated loans that here, but I will tell you they're largely absent got into trouble, and I won't name them at latter.
Speaker #2: because they were shopping And the reason why is Where everybody So around asking for 80 to 85 percent financing, and they had several willing participants in that.
Speaker #2: We did not. I asked Adam Cyber, our head of originations, how did we avoid these guys? And he goes, those packages submissions wound up in the garbage because it started with 80% leverage.
Brian Harris: I asked Adam Siper, our head of originations, How did we avoid these guys? And he goes, They Those packages submissions wound up in the garbage because it started with 80% leverage. And he said, We didn't feel like we had to do that. So that was a nice bit of underwriting there that avoided problems. But I would also tell you, the banks are not really competing on the bridge loan side. Some insurance companies are, but I think with the amount of regulators in the banks' offices that are looking to criticize loans, if anything looks amiss, anything but a stabilized cashflow is not really landing in the banks at all. And a lot of our the competitive set that we used to deal with, they are...
Brian Harris: I asked Adam Siper, our head of originations, How did we avoid these guys? And he goes, They Those packages submissions wound up in the garbage because it started with 80% leverage. And he said, We didn't feel like we had to do that. So that was a nice bit of underwriting there that avoided problems. But I would also tell you, the banks are not really competing on the bridge loan side. Some insurance companies are, but I think with the amount of regulators in the banks' offices that are looking to criticize loans, if anything looks amiss, anything but a stabilized cashflow is not really landing in the banks at all. And a lot of our the competitive set that we used to deal with, they are...
Speaker #2: And he said, we didn't feel like we had to do that. So that was a nice bit of underwriting there that avoided problems. But I would also tell you the banks are not really competing on the bridge loan side.
Speaker #2: Some insurance companies are, but I think what the amount of regulators in the banks' offices that are looking to criticize loans, if anything, looks amiss, anything but a stabilized cash flow, is not really landing in the banks at competitive set that we used to deal all.
Speaker #2: with, they are I would call them permanently smaller, unless they And a lot of the go out and raise capital. I mean, they don't have a valuation problem.
Brian Harris: I would call them permanently smaller unless they go out and raise capital. I mean, they don't have a valuation problem, they've lost money, and that shows up in the discounted book value. So we believe, and I don't wanna get too many secrets out of the kitchen here, but we think that the single asset world, you know, $250 million and over, is being handled by the large banks that, you know, are on Park Avenue and San Francisco. But the loans that we do, we historically have had an average loan balance of about $25 million. I think you'll see that tick up a little bit.
Brian Harris: I would call them permanently smaller unless they go out and raise capital. I mean, they don't have a valuation problem, they've lost money, and that shows up in the discounted book value. So we believe, and I don't wanna get too many secrets out of the kitchen here, but we think that the single asset world, you know, $250 million and over, is being handled by the large banks that, you know, are on Park Avenue and San Francisco. But the loans that we do, we historically have had an average loan balance of about $25 million. I think you'll see that tick up a little bit.
Speaker #2: They've lost money. And that shows up in the discount to book value. So we believe and I don't want to get too many secrets out of the kitchen here, but we think that the single asset world, 250 million and over, is being handled by the large banks and San Francisco.
Speaker #2: But those that are on Park Avenue, the loans that we have had an average loan balance of about, historically, $25 million. I think you'll see that tick up a little bit.
Speaker #2: And the orphan in the world right now for getting a loan from a large bank or from a conduit or from a bridge lender is at around 80 to 100 million.
Brian Harris: And the orphan in the world right now for getting a loan from a large bank or from a conduit or from a bridge lender is at around $80 to 100 million. It's a little too big, it's too big for a conduit, it's too small for a single asset, and it's too big for a regional, but it fits us just fine. So we're pretty comfortable. In fact, you know, when we said in this earnings call that we had $430 million in loan originations, we did have a $200 million loan fall out of application during the quarter. And if it had come in, you know, then we'd be talking about $630 million instead.
Brian Harris: And the orphan in the world right now for getting a loan from a large bank or from a conduit or from a bridge lender is at around $80 to 100 million. It's a little too big, it's too big for a conduit, it's too small for a single asset, and it's too big for a regional, but it fits us just fine. So we're pretty comfortable. In fact, you know, when we said in this earnings call that we had $430 million in loan originations, we did have a $200 million loan fall out of application during the quarter. And if it had come in, you know, then we'd be talking about $630 million instead.
Speaker #2: It's a little too big for single—it's too big for conduit. It's for single asset, too small, and it's too big for a regional, but it fits us just fine.
Speaker #2: So we're pretty comfortable. In fact, when we 430 million dollars in loan originations, said in this earnings call that we had we did have a 200 million dollar loan fall out of application during the quarter.
Speaker #2: And if it had come in, then we'd be talking about it; still wouldn't think that would change our opinion of anything, other than on a certain date we had a certain amount of loans competing again.
Brian Harris: But I still wouldn't think that would change our opinion of anything, other than, you know, on a certain date, we had a certain amount of loans closed. So yeah, but they're back, they're competing again, and I think that, you know, their cost of funds is still rather high, but the Fed, when the Fed got rid of T-Bills at 5.5%, that is probably the single biggest event that helped the regional banks because they became more competitive on deposits. Whereas, you know, when they had to raise their deposit rate, and as you know, banks have a 5-year conveyor belt where the rates, you know, higher rate loans pay off as rates are falling, that really did help them a lot.
Brian Harris: But I still wouldn't think that would change our opinion of anything, other than, you know, on a certain date, we had a certain amount of loans closed. So yeah, but they're back, they're competing again, and I think that, you know, their cost of funds is still rather high, but the Fed, when the Fed got rid of T-Bills at 5.5%, that is probably the single biggest event that helped the regional banks because they became more competitive on deposits. Whereas, you know, when they had to raise their deposit rate, and as you know, banks have a 5-year conveyor belt where the rates, you know, higher rate loans pay off as rates are falling, that really did help them a lot.
Speaker #2: And I think that their cost of funds is closed. still rather high, but the Fed when the Fed got rid of T-bills at 5.5%, that is probably So yeah, they're back.
Speaker #2: The single biggest event that helped the regional banks: deposits. Whereas when they had to raise their—a five-year conveyor belt where the rate, higher rate loans pay falling—that really did help them a lot.
Speaker #2: And if you remember, we had $2 off as rates are 2 billion worth of T-bills at 5.5%. We moved that into They're securities. And now we're going to move out of Because they became more competitive on those securities into bridge loans and conduit.
Brian Harris: And if you remember, we had $2 billion worth of T-Bills at 5.5%. We moved that into securities, and now we're gonna move out of those securities into bridge loans and conduit. The conduit business is the wild card, as to, because that's a stabilized cash flow, and that does compete with regional banks. So, and that business is still, I would call it soft. There's just not a lot of volume there. If you look at conduit deals, there's 7, 8, 9 originators, in those pools. So, but we're having the beginnings of those discussions, and it feels a little bit like 2008 and 2009 to me, because it will come back.
Brian Harris: And if you remember, we had $2 billion worth of T-Bills at 5.5%. We moved that into securities, and now we're gonna move out of those securities into bridge loans and conduit. The conduit business is the wild card, as to, because that's a stabilized cash flow, and that does compete with regional banks. So, and that business is still, I would call it soft. There's just not a lot of volume there. If you look at conduit deals, there's 7, 8, 9 originators, in those pools. So, but we're having the beginnings of those discussions, and it feels a little bit like 2008 and 2009 to me, because it will come back.
Speaker #2: The conduit business is the wild card. As to because that's a stabilized bank. So—and cash flow—and that does compete with regional. That business is still, I would call it, soft.
Speaker #2: There's just not a lot of deals, there's 7, 8, volume there. If you look at conduit 9 originators. we're having the beginnings of like 2008 and 2009 to me, because it will come back.
Speaker #2: I recession that we went through and the mean, as these properties come out of that In those pools. low cap rate environment, these cash flows will start But to stabilize at higher rates.
Brian Harris: I mean, as these properties come out of that recession that we went through and the low cap rate environment, these cash flows will start to stabilize at higher rates. And, that should be a tailwind for the conduit business at large and also Ladder's participation in it.
Brian Harris: I mean, as these properties come out of that recession that we went through and the low cap rate environment, these cash flows will start to stabilize at higher rates. And, that should be a tailwind for the conduit business at large and also Ladder's participation in it.
Speaker #2: And that should be a tailwind for the conduit business at large and also latter's participation in
Speaker #2: it.
Speaker #3: Thank you. Very helpful.
Steven DeLaney: Thank you. Very helpful.
Gabe Poggi: Thank you. Very helpful.
Brian Harris: Okay.
Brian Harris: Okay.
Operator: We have reached the end of the question and answer session. I'd now like to turn the call over to Brian Harris for closing comments.
Operator: We have reached the end of the question and answer session. I'd now like to turn the call over to Brian Harris for closing comments.
Speaker #3: We have Okay. reached the end of the question and answer session. I'd now like to turn the call over to Brian Harris for closing comments.
Speaker #2: Thank you for all the support in 2025 and understanding our somatic way of piecing one act into decisions. But we laid the another, as we make our investments groundwork that will be here for years.
Brian Harris: Thank you for all the support in 2025 and understanding our thematic way of piecing one act into another, as we make our investment decisions. But we laid the groundwork that will be here for years, by becoming an investment-grade company and largely financing ourselves with unsecured debt. We're gonna keep doing that. We are the only investment-grade company in the space. We will not be the last, I don't think. But you know, we are very happy with the way we performed and also how our-- how ready we are now to move forward into a reset level of prices for real estate. And a liquidity set that you don't want no liquidity, you don't want no competitors, but you also don't want too many at one time.
Brian Harris: Thank you for all the support in 2025 and understanding our thematic way of piecing one act into another, as we make our investment decisions. But we laid the groundwork that will be here for years, by becoming an investment-grade company and largely financing ourselves with unsecured debt. We're gonna keep doing that. We are the only investment-grade company in the space. We will not be the last, I don't think. But you know, we are very happy with the way we performed and also how our-- how ready we are now to move forward into a reset level of prices for real estate. And a liquidity set that you don't want no liquidity, you don't want no competitors, but you also don't want too many at one time.
Speaker #2: By becoming an investment-grade company and largely financing ourselves with unsecured debt, we're going to keep doing that. We are the only investment-grade company in the space.
Speaker #2: We will not be the last, I don't think. But we are very happy with the way we performed, and also how ready we are now to move forward into a reset level of prices for real estate—no liquidity.
Speaker #2: You don't want no competitors, and a liquidity set that you don't want but you also don't want too many at one time. The private large asset managers, and most of them are not writing loans that compete with us.
Brian Harris: The private credit world is largely controlled by large asset managers, and most of them are not writing loans that compete with us. So, we think we've got a very positive runway ahead of us, and we look forward to 2026, and we are completely on offense now. No more T-bills, no more AAAs. We're gonna start moving into, you know, lending, ownership of real estate, as well as, you know, capital markets activity in securitization. So long-winded answer there, but a big thank you to all of our investors, and we do, we have an organic plan in place to get the market cap of this company higher through earnings.
Brian Harris: The private credit world is largely controlled by large asset managers, and most of them are not writing loans that compete with us. So, we think we've got a very positive runway ahead of us, and we look forward to 2026, and we are completely on offense now. No more T-bills, no more AAAs. We're gonna start moving into, you know, lending, ownership of real estate, as well as, you know, capital markets activity in securitization. So long-winded answer there, but a big thank you to all of our investors, and we do, we have an organic plan in place to get the market cap of this company higher through earnings.
Speaker #2: So the credit world is largely controlled by a very positive runway ahead of us, and we look forward to 2026. Think we've got a— and we are completely on offense now.
Speaker #2: No more T-bills, no more AAAs. We're going to start moving into lending, ownership of real estate, as well as capital markets activity in securitization.
Speaker #2: So long-winded answer there, but a big thank you to all of our investors and we do we have an organic plan in place to get the market cap of this company higher through earnings.
Operator: Well, okay, this concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.
Operator: Well, okay, this concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.
