• Distributable Earnings (Q4 2024): $33.6 million or $0.27 per share.
• Return on Equity (Q4 2024): 8.9%.
• Distributable Earnings (Full Year 2024): $153.9 million or $1.21 per share.
• Return on Equity (Full Year 2024): 9.9%.
• Liquidity (as of Dec 31, 2024): $2.2 billion, including $1.3 billion in cash and cash equivalents.
• Adjusted Leverage Ratio (as of Dec 31, 2024): 1.4 times.
• Loan Portfolio (as of Dec 31, 2024): $1.6 billion with a weighted average yield of 9.3%.
• Loan Payoffs (Q4 2024): $575 million.
• Loan Payoffs (Full Year 2024): $1.7 billion.
• Real Estate Portfolio (Q4 2024): Generated $13.2 million in net rental income.
• Real Estate Portfolio (Full Year 2024): Generated $56.3 million in net rental income.
• Securities Portfolio (as of Dec 31, 2024): $1.1 billion with a weighted average unlevered yield of 6%.
• Unsecured Corporate Revolving Credit Facility: Increased from $324 million to $850 million, with potential upsizing to $1.25 billion.
• Unencumbered Assets (as of Dec 31, 2024): $3.8 billion or 77% of total assets.
• Book Value per Share (as of Dec 31, 2024): $13.88.
• Dividend (Q4 2024): $0.23 per share.

• Warning! GuruFocus has detected 4 Warning Sign with LADR.

Release Date: February 06, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Ladder Capital Corp (NYSE:LADR) achieved distributable earnings of $33.6 million in Q4 2024, translating to $0.27 per share, and a return on equity of 8.9%.
• The company maintained a strong liquidity position with $2.2 billion in liquidity, including $1.3 billion in cash and cash equivalents.
• Ladder Capital Corp (NYSE:LADR) successfully extended and upsized its unsecured corporate revolving credit facility to $850 million, with potential to increase to $1.25 billion.
• The company received positive outlooks from Moody's and Fitch, and an upgrade from S&P, moving closer to achieving an investment-grade credit rating.
• Ladder Capital Corp (NYSE:LADR) generated $56.3 million in net rental income from its real estate portfolio in 2024, with long-term leases to investment-grade tenants.

Negative Points

• The loan portfolio decreased significantly from $3.9 billion at the end of 2022 to $1.6 billion by the end of 2024.
• Despite a strong liquidity position, the company faces challenges in rapidly deploying capital into new loan originations.
• Interest rates on loans remain high, with borrowing costs near 7%, which could impact future loan demand.
• The company has two loans totaling $77 million on non-accrual status, indicating potential credit risk.
• Ladder Capital Corp (NYSE:LADR) is cautious about lending in large cities with capital flight and crime issues, which may limit growth opportunities.

Q & A Highlights

Q: With CMBS issuance up significantly in 2024, do you see an opportunity to increase CMBS Conduit originations as banks pull back? A: Brian Richard Harris, CEO & Director, noted that while there is a shortage of fixed income investments causing tightening in credit spreads, the business works better with a steeper yield curve. Currently, other investments seem more profitable, but as the curve steepens, Ladder Capital may increase involvement in CMBS Conduit originations.

Q: Are you planning to maintain the current reserve level given the significant repayments received? A: Brian Richard Harris, CEO & Director, explained that the reserve level is higher due to potential problems still present in the economy. While the reserve level is adequate, there is a possibility of releasing reserves back in the future, but no increase is expected unless unforeseen economic changes occur.

Q: Are you seeing yields tightening for multi-family properties, and how is it impacting your lending pipeline? A: Brian Richard Harris, CEO & Director, acknowledged that credit spreads are tightening, but interest rates remain high. Multi-family properties are considered safe, but Ladder Capital is not overly targeting them. They are open to lending on various property types, provided they meet credit standards.

Q: Can Ladder Capital grow its loan book by $1 billion in 2025, and what would be the expected return on equity for these loans? A: Brian Richard Harris, CEO & Director, expressed confidence in growing the loan book by $1 billion, targeting an unlevered return of around 8.5%. The company plans to move capital from securities and T-bills into higher-yielding loans while maintaining credit quality.

Q: Is there an opportunity for Ladder Capital to partner with an agency servicing business to co-originate loans and participate in servicing economics? A: Brian Richard Harris, CEO & Director, stated that while it's reasonable to pursue such partnerships, Ladder Capital is not currently engaged in any. They are open to suggestions, particularly with insurance companies, but are focused on leveraging their capital in the current investment environment.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.