Release Date: February 06, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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.
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