[Management View]
Ladder Capital achieved investment-grade ratings from Moody’s and Fitch, marking a significant milestone in its strategic journey. The company emphasized its focus on maintaining conservative leverage while shifting towards unsecured debt to optimize funding costs and enhance shareholder value.

[Outlook]
Management provided guidance on continued portfolio growth, leveraging its investment-grade status to reduce cost of capital and expand its investor base. The company plans to capitalize on current market conditions to deploy capital into new, higher-yielding investments.

[Financial Performance]
Ladder reported distributable earnings of $30.9 million, or $0.23 per share, with a 7.7% return on equity for Q2 2025. The company’s adjusted leverage was 1.6 times, below its target range, and it successfully issued a $500 million investment-grade bond at a 5.5% coupon.

[Q&A Highlights]
Question 1: Do you think that because there's less volume in the market and the selling activity you mentioned, is that would that be getting that portfolio kind of flat for this quarter? Or is it more just kind of selective selling there? Are you talking about the securities portfolio? (Line breaks here)
Answer: The securities portfolio is up generally, especially given the volatility of April. We bought quite a few securities, and they are at fair value now. We have been selling selectively as we transition from T-bills into securities and now into loans. The portfolio is designed to be a source of liquidity as the loan book builds.

Question 2: Can you give us any color on the kind of convertibility of the loan pipeline into the book and just how conversations are going in the market? (Line breaks here)
Answer: We had a dip in loan origination volume this quarter, but have already written more loans in the third quarter. Certain pockets of multifamily where rents are falling can cause concerns during due diligence. Closings are taking longer, possibly due to increased caution on the lending side. We have $325 million under application, with $275 million likely to close.

Question 3: Does the IG rating open you up to different investments than you previously might have considered? (Line breaks here)
Answer: The IG rating makes investments more profitable by lowering interest expenses. We are not pursuing higher octane mezzanine investments but may move into double A's instead of triple A's. We focus on discerning credit likely to pay off on time without legal issues.

Question 4: Can you talk about if you're thinking about growing the net lease portfolio and if managing to a certain wall is important? (Line breaks here)
Answer: We target longer leases when possible, driven by cost of funds versus cap rate. We focus on dollars per foot exposure to minimize losses. Interest in the business will pick up when financing costs decrease, potentially leading to more acquisitions.

Question 5: What are your thoughts on a ramp on leverage now that Ladder's achieved the investment-grade rating? (Line breaks here)
Answer: We intend to maintain two to three times leverage, consistent with rating agency parameters. The composition of leverage is shifting towards unsecured debt, which may become more compelling as cost advantages increase.

Question 6: Do you have any expectations for net portfolio growth in the back half of the year? (Line breaks here)
Answer: We expect portfolio growth with limited payoffs due to vintage and high payoff volume last year. Levered returns on new loans are healthy, with 9% unlevered returns, and spreads are tight but rates are high.

Question 7: What is the benefit on the cost of fund side from the investment-grade bond rating? (Line breaks here)
Answer: The bond coupon would have been around six and a half percent without the rating. We expect more tightening in the investment-grade space as we become a more frequent issuer and redeploy into higher-yielding investments.

[Sentiment Analysis]
Analysts expressed positive sentiment regarding Ladder's strategic shift towards unsecured debt and investment-grade status. Management conveyed confidence in its ability to leverage these changes for future growth and stability.

[Quarterly Comparison]
| Key Metrics | Q2 2025 | Q1 2025 | YoY Change |
|-------------|---------|---------|------------|
| Distributable Earnings | $30.9M | $28.5M | +8.4% |
| Return on Equity | 7.7% | 7.5% | +0.2% |
| Loan Portfolio | $1.6B | $1.5B | +6.7% |
| Securities Portfolio | $2.0B | $1.8B | +11.1% |

[Risks and Concerns]
Management noted risks related to multifamily rent declines affecting loan underwriting and increased scrutiny in due diligence. The foreclosure of a $150 million multifamily loan was highlighted as a concern.

[Final Takeaway]
Ladder Capital's achievement of investment-grade status marks a pivotal moment in its strategic evolution, enabling a shift towards unsecured debt and reducing funding costs. The company is well-positioned to capitalize on current market conditions, with strong liquidity and a disciplined approach to credit. Management's focus on maintaining conservative leverage while expanding its investor base underscores its commitment to delivering stable returns and enhancing shareholder value.