LADR - Earnings call transcript Q1 2018

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Ladies and gentlemen, greetings, and welcome to Ladder Capital Corporation First Quarter 2018 Earnings Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Michelle Wallach. you. Thank

begin. may You

Michelle Wallach

Executive will good Company’s for Welcome XXXX. the on we the are available This Company’s this and Company’s Fox, Capital Financial Chief Relations Investor in With to for March earnings afternoon Officer. Chief the filed website Harris, call first our Brian and XXXX. afternoon you Marc report quarter you be the the quarter everyone. afternoon, Ladder me and Officer; Thank quarter our XX-Q SEC released results The the XX, Form the section ended financial this earnings is with of release week. of

information XXXX be in today. during forward-looking place no may this XX-K made Accordingly, forward-looking the you’re Capital undertakes undue to in These cautioned course differ statements. Corp’s actual statements. from not may are management’s the begins, uncertainties to this these discussion or differ that could The constitute made Form based risk on not of trends statements from in statements Ladder Before of that are statements. expectations for any cause results detailed a materially historical certain results and to are actual forward-looking remind call. that beliefs, the refer to I’d statements expressed Company those and current course reliance statements on a duty described made materially subject like of number forward-looking update any to of to call and forward-looking call the I that on implied everyone those to you cause could and based more these factors

of I’ll The is for the in measures the turn the earnings financial release. of Reconciliation financial on be discussed are with this that, be isolation intended contained prepared With Officer, non-GAAP over financial or this Chief non-GAAP Brian to to substitute our with conference Company’s our accordance call. measures GAAP, certain presented information accordance most Executive a in to the considered will in information as measures not comparable Additionally, call presentation GAAP. in Harris.

Brian Harris

our returns for of per to strong have capital rate that XXXX of I arising billion foundation earnings, public measure shareholders quarter Ladder’s XXXX. $X.X The the plan report from in to our am our balance I April. sheet end earnings On most Today, in asset also since quarter to would rate, billion more profit going we expanded. today this weighted year Michelle. of grown walk net average and rooted through loans at million from share, and the Since of deliver our at to loans coupon the in floating $X to which of exposure positive or are ahead X.X% with benefit the best $X.XX on of core very a our last how especially our report emphasis interest we these how is in investments pleased has LIBOR start efficient Thanks, environment. you of structure a first I non-GAAP $XX.X strong expected mentioned call,

increase in so as in about power earnings Ladder’s to by we XXXX, more enhanced LIBOR, existing rate, is positive of for this If has Ladder each should every three XXX annual year basis we Federal benefited degree gradually on the trajectory expect and to short-term four increasing position As exposure the point built up but raising interest fed fed long consistently times per be share have Bank times and quarter. raised rates, Reserve current their continues an has maintained. the this to $X.XX three as the funds LIBOR

quarter generally sheet we to loan that display. on look that these commercial investors where the real cover We’ve flows. at as rates the We multi-cylinder on also our properties from to recurring tried XX% quarterly earnings a predictable our we was ROE highly X% of in our our true reflect net short-term dividend rising streams. this of these full interest earn While margin aim certainly income balance income benefit from and and own, estate to guided a always power our investing first earnings analysts we hefty said basic approach and interest to was from our leased quarter cash to inventory,

last for stated goal the business were to two that total quarter, light ROE. objective. conduit estate we targeted supplement our first profit $XX.X the XX% in us We second real and also transactions public margin securitizations that of call, yield all in separate transactions, of we We a also have to contributed going earnings quarter, had million going would In profits gains million margin were earned mentioned X% above supplement were also to XX making to two our of begin portfolio the with of we portions during contributed say $XXX.X $XXX average loans our Since further of In On those the sell quarter. sales first likely business into billion $X conduit securitization, that product we core X.XX%. of investments sold our X.X% to capital million I earnings we producing loans X% allow that $X.X real which XXXX, of profit $XX.X million to an loans cumulative for that of billion estate profitable. a XX% of million. the of baseline earnings $XX.X to of early

$XX.X real were we base million from $X.XX to our in With in quarter. the of share core in earnings, expanding million the addition per conduit of XX.X% recurring gains $XX.X in income, and core of able our $XX.X annualized produce to sale resulting million of after-tax the from estate ROE EPS in an

results, is balance first the acquired to million. deal the reviewing don’t value non-recourse next increased share mortgage also share. $XXX.X $XX.X origination lender. $XX.XX earnings the we in mortgage loans total of years. loan I from quarter, own this million quarter originated quarter in $XXX.X within financed be it $XXX.X REIT will for industrial partner the million quarter Our XX% held first in to a addition our per debt this comprised with equity and book loans sheet of strong conduit our We these Atlanta of in near value overlook the increased activity. a book also as million taxable third-party per and expect $XX.XX of with our of asset two loans. in about undepreciated This GAAP to an in want to we In a investment subsidiary sell property We to In

two in to participate also JV and $XX further some quarter, slated to we finance expect strategy second the the we months the conduit over reported of earnings forward combined in our we on purchase a which Looking with is as third-party is six which planned. million, securitizations successfully results our core also approximately $XXX.X California to clear debt. coast last to quarters in properties over business for unfolding We expect hope we million a residential that are indication

coverage the per in Ladder share, quarter among $X.XXX highest position ratios per dividend our continues in dividend earnings group. share of With payment having peer the to core our the $X.XX cash in

to I address over to recent Related turn Management. with developments briefly Fund wanted Marc, I you Before

Company. received to unsolicited acquire previously non-binding an proposal from As announced Related XXXX, XX, the we on January

shareholders would legal and Ladder an in to Board consideration numerous significantly Related, with always of the long-term financial be and be The due Following fiduciary Board the fully the give the of and Company careful that proposal credible seriously. members will Ladder undervalued determined with as Board advisors shareholders after to Company unlikely on discussions value its and the takes any and responsibilities consideration parties aligned agreement reach very the significant continues shareholders. assistance interest were to shareholder its proposal. that The and the best on and enhancing value to Board focused both

to matter on do While call Marc. and ask quarter, we hand your provide to in recap, this focused Related. the I’ll to this you of the to intend is first not our questions you further financial and that now comment purpose today’s respect address we topic as review we results to that, keep strong With with off to wanted

Marc Fox

I ended March Capital’s XXXX. Brian. Ladder you, Thank review the XX, now quarter for financial results will

average and average results Ladder equity earned core X% transactions EPS on any earnings you period As or Ladder core of of million, Each generated when $XX.X return $X.XX the earnings assets. estate real per XX.X%. participate quarter, any $X.XX when of EPS per during after-tax these share, $XX.X equity generating in and core Ladder the core non-condominium first QX in not of while performance on did return securitization noted, sell XXXX million an a in exceeds of of resulting share, measures

rental securitized of losses loans loan before the tax of portfolio months were was coincide the primarily to with last net earnings GAAP and and Ladder’s During disposition of during for before real interest net the $XX.X gains on the related income in results income real non-condo from ended income estate in QX net the $XX.X supplemented year. totaling generated million the Overall income of estate the Ladder reported realization assets. our a sheet sale from hedge million quarter generated of million of million and GAAP On by loans, compared core terms rental net by timing recognition sales largest quarter. three revenues, net $XX.X on gains earnings taxes core balance quarter income from net The XXXX first derived the net gains adjustment to portfolio, X/XX/XX interest of real securitization, the income basis, hedged estate. to to of in $XX.X of of and and

of sheet an major from the has at $X.XX rate rate mortgage loans The loans, interest the had up During X.XX%. which of balance largest of the LIBOR components. portfolio component portfolio billion billion, over year. quarter three is to This $X.XX the loan plus increased $X.XX billion beginning floating Ladder’s average growing

loans a of maturity mortgage of advances will portfolio the April, were sheet loans balance at conduit at component $X.X early floating conduit weighted-average reduced of balance $X.XX $XXX.X sheet by our CLO mezzanine at addition, million of of two which X.XX rate a earning March rate debt, loan loan of the loan which balance a XX.XX% loan rate $XXX.X of This XXXX. average securities increase million interest interest transactions. quarter $XXX.X the interest fixed rates mortgage a rate with contributing loan major end interest the income adjusted combination Ladder’s rate of new of has portfolio loan a to committed as years. had X.X% stood of balance and financed Much approximately loan FHLB this X.XX% the term in billion been sheet weighted-average by loan of a includes while been point by interest expanding The upward of up fund Altogether, average weighted million. is over a freed loans Ladder million, weighted the that used $XXX loans end. million remaining two rate portfolio originated during million In on repurchase The on portfolio portfolio had XX, portfolio securitization of $XXX.X last balance those quarter loans and the annual capital months. is has facilities. XX the loans to to principal at the final

reallocation the approximately real have and quarters investments recent result earnings. from net steady over recurring methodical sheet a from past sources capital As derived loans of and during XX.X% the revenues been away balance quarters, of of into CMBS and four in investments estate of

Finally, the core real sales of estate equity a gains. from completed of quarter, two community properties, $XX.X we investments and portfolio our office an generating million also housing building of the during manufacturing

an office to in the building In worked under first building as terms bank market acquired that the lease. a We Ladder venture also buildings an of we XXXX. property, for the particular by below building office case was of at continue a transactions that these the the a closer A approach of sale, industrial investments time, occupied and in million this investment portfolio part that building of joint acquired quarter. three one during look reveals $XX.X has apply. At

square the and later the double at building reflected The price rate. when analysis rated at and a tenant an the XX-year of XXXX per acquisition underwriting occupancy priced expire. six Our commenced be vacate XXX,XXX lease in square foot building our months space did rental under its a A view that purchase lease a tenant would this vacated higher June foot

is XX.X% as equity projected market at on result of a an Ladder’s and held all a rates. for resulting at if As in of had sell releasing asset that was of asset value successful by note it the at by multi-year created gain return a time Ladder a proceeds the a resulted payable annualized the share and an in to approximately hold realization which the interest, sell there in of with of flow consistent this Ladder being we important was This Ladder $X.X will tax core any venture REIT re-lease gain appreciably because million XX%. be was a rent period controlling to was property that was building higher joint the million the cash It property the prior paid the gain. of acquisition, this $X.X the to REIT core a incremental little while it on and well than level in the tenant positioned QX.

on these events previous to which ability our enhancing a house well. vacant meant was acquired interest and enhancing the XXX you investment Ladder than is In million in strategies will in year $XX interest. in a upon corporate because taxable a or shorter they value case, event, property referenced building $XX The the venture within required repeated electing controlling releasing of substantial JV after key increased gain the previously proceeds building of warehouse ROE. near-term community investment that that a acquired as on manufactured to sold, market proceed provide the more envisioned which insight taxable manufactured the to meet Ladder a square property foresee full much Ladder portion In discuss foot over the execute building possible. and opted food as building some reconstitution with of therefore subsidiary. and could event and capture the with being food quarter. period We’ll reduced to some is time acquisition, well-known to interest a to we the hold the joint you, value the estate unrealized in invested is was shared affecting Ladder was to the It El real this time skill is a owns a in a Similar years. over as calls hold housing February, a of gain will to to square the XXXX achieved so REIT This be enhancement take posted tenants community $XXX subsidiary constructed near the a three loop concrete property with community of this by provide existed that be XX.X% beverage on was develop. the pad annualized set this that REIT tax conjunction In enhance to total regarding investment industry QX, core less occupied keep foot parcel the of this sale, It anticipated fee simple resulting first acre value was to that value reflecting beverage possibilities. Monte industry in XX% applied substantially X,XXX in and perspective acquisition brand We’ve XXXX California. in XX% a that acquisition recently future park. a the XX investment a this property close events per Ladder regarding and March as ground In a soon in to for realized. the We wanted square The basis. gain improve lease decided property Ladder this the a in property’s next the at extra taxed in Ladder rate. underwriting leading this on gain the effectively Moving distribution a value before one by investments in the per a currently of acquired standards. housing Atlanta. foot a

including mortgage-backed loans higher billion stood $X.XX X.XX end ratio XX.X% mortgage the our unencumbered investment comprised equity than balance to consistent Senior the and of cash $X.X of an unsecured as resulting quarter first X.X% stood debt of to debt by assets times. secured March is mortgage at in cash $X.X metrics, commercial debt X. assets and to Turning billion, loans, debt senior and Company. the with senior key unsecured investments at Total of end first XXXX. of were XX, of were reflecting including secured, sheet an total ratio asset-base. end assets XX.X% which investment $X.X X.XX secured activity total secured billion Total securities adjusted plus our at focus XXXX, equity of unencumbered Quarter was billion, at outstanding to assets

the total interest weighted-average originations, sheet of average The LIBOR the loans, Ladder during terms on was million $XXX.X March XX.X%. XXXX of plus rate conduit of first the X.XX%, quarter at first loans balance ratio was The loan produced sheet X.XX%. and a real was In average loan balance quarter quarter. the value in commercial mortgage our loans on originated during originated loans the XX, on of estate to interest rate

or the of reform or During million and core quarter in $X.X about earnings taxable real we defaulted related corporate was tax resulted enacted the million. earnings, after-tax reduction EPS. by to the loan from estate REIT The $X.X core impacted per legislation. federal $X.XXX XX% on tax to the federal were rate gains a recently impact XX% share of in subsidiary increase This Ladder to interest by securitization our reduced amount receive soul expect that quarter, sales primarily the Ladder's first gains TRS

XX% to Our dividend. benefited also shareholders applied reduction REIT from a

billion billion availability over and for March side XXst, core of committed the additional we of debt of as $X.X outstanding investments. had $X.X On financing financing

we’ve four of year When debt. million through the CLO or with five base comprised with to non-recourse past base combined debt debt year of debt of a corporate $XXX Two million and equity $X.X net of bonds. issuances addition billion non-mark-to-market unsecured and issuance finance the enhance $XXX.X is of investments. the of to other $XX.X million of quarters, equity, Over XX.X% Ladder’s $X.XX the of non-recourse mortgage of X/XX, our non-recourse diversity $XXX.X and real eight million estate at liabilities, balance continued of funding unsecured XX of total billion permanent and

revolving at facility addition our capacity us. had In syndicated unsecured of to available $XXX.X X/XX, credit full million we the

quarter year, have seen balance our XXX billion from point range. approximately extend in So notable exercised end of plus tailwind existing this X/XX, At our course outstanding spread banks to million loan the of four points far bank have with referenced leased Adding year of we and $XXX.X to X.XX our sheet the to we funding borrowings maturities from the options on an X.XX%. cost At we the of facilities. six had XXX cost LIBOR to average the average LIBOR net months previously weighted of over financing reductions income basis two of was FHLB facilities. interest $X.X the basis past maturity

of we $X.XX quarter share Ladder resulting dividend a payout dividend dividends, of Finally, basis a earning per ratio. EPS $X.XX has cash while in per paid first rolling the fourth $X.XXX on paid share a per XX% share core in quarter

of the generated securitizations and XX.X%. two and of We securitized We EPS transactions of core a $XXX.X quarter a that $XXX.X earnings X.XX% real sold core of net $X.XX to resulting allocation a $X.XX million this And investments capital per selection after-tax EPS. and core risk we resulting of paid in of per share. million dividend open in in was continue the quarter profit equity gains we with EPS disciplined summing share margin. encounter generated $XX.X of and originated term in up, $XX.X questions-and-answers. to line cash core of total added share At XXXX core the million properties million the $XX.X per loans the loans estate. in $X.XX approach core apply face share time average point, in million return of So of the Ladder on in first leverage, reflecting And the use it’s we per the to to $X.XXX for to longer of and

Operator

conducting will Please we Our Thank Steve ahead. go Delaney and you. Ladies the session. question be of now from [Operator first from Securities. question-and-answer our comes JMP line gentlemen, Instructions]

Steve Delaney

story. tell be It that’d you’ve not Marc, like slide in? a describing larger if it so Paul what helpful? the Minnesota so that sound was your Could us complex find you you in it in that were that building the could office does one, is St. can you we in deck, K, identify market highlighted

Marc Fox

portfolio. part That’s the of Richmond Virginia

Steve Delaney

and Yes, over was okay Complex like that that Innsbrook something Properties think? I in Highwoods or there

Marc Fox

correct. that’s Complex Innsbrook The

Steve Delaney

appears loan And an income seven. reserve provision line unusual it million statement the the for to in brings loss, and $X it total

You a single particular loan. little that you can a detail us reserve mentioned defaulted loan? a on give And on specific this Is that?

Marc Fox

two simultaneously, reduction was originated a actually in million $X total. specific point that reserve loan leaves is is ground this that -- it. components on the in lend, amount the Sure, that basis million same loan a property the -- us is that, excess on this to relates that's $X.X mezzanine we $X.X which and the of first has There’s and to million a $XX.X mortgage with million at

went adding building is point we we’re and got had expanding reserve. to balance that it -- one our we before portfolio, start balance building reserve. general and $XXX,XXX decided been We to expanded reserve we and a on our we years $XXX,XXX then a stopped quarter felt The at rate we a that started quarter. every loan where And putting of other then sheet to sheet loans overdoing up couple a back to for were the

building any of and subject a update don’t kind in going is that it’s and haven’t -- default that’s principal property got the that expectation we of you’ll that, it’s occupied, we give XXX% you on a tenant the in lease property new the incurred So, just year it, have an XX forward. -- loss. see The is, a

Steve Delaney

the allowance specific provision the but assume for should that sheet X.X considered general. we Is So, balance all loss the be loan correct? for that would or of that

Marc Fox

specific correct, have. That’s the reserve we that’s only

Operator

you. Thank

line next James. Our question comes Stephen Raymond of from from go ahead. Please Laws the

Stephen Laws

Brian, this talked sales? properties future continuing Any year we those. identified could should to about little, estate real that with look sales regards a expected to or you comment the about you and at pace think

Brian Harris

Brian. Sure, this is

have decision a the on think I XXX% make leases. just of to their has that Paul We St. the was property renewed now tenancy referenced

And XX for so as it’ll same a years be next that, of much the pretty think. result we the story

So like we have whether I or think property. we’d to make a decision as not that sell to to

been comfortable -- extended or should the going there, Now it that mortgage we’re hang going the some we not condominiums. a we’re it. we the in onto what refinance And think to it’s continue but sell in own And where and fully very sure to REIT. basis I'm with to I do it we’re

east which You've condominiums XX is out of the condominium still, we’re Florida on project in around Manhattan than but less We’ve lower units. seen a of and almost we’ve Las got left in third it’s Vegas. side some

I less we those see of expect there quarter. in think up fourth maybe the the third construction we third finishes online, comes would -- the may sales the it’s end CMO or assuming and the and XX closings units. And

Steve Delaney

an can as maybe just margins. a a strong and general in seen today? markets? little the are historically markets choppy, Appreciate the a what on you and on markets, but maybe of It be we’ve solid update the securitization Can in on on switching volume like gain lumpy seeing securitization what you’re just sale little that talk update update to QX securitization

Brian Harris

when not a about are about the little light Volumes securitization I would say securitization. really I talking single talk Sure. I assets the and am bit market,

bonds there’s the partner billion. on book out owned to For at instance, said a property refinance $X.X -- I some think is that that

I the So bit. The what conduit are down that’s little not I volumes a am general think talking about. business,

think call seen I have a I see -- would how have of wait banks they it mainly reported And bit. our year. their slowdown, on frequently be moment, be we as earnings of had up I bit loan bit by because a that that moved wouldn’t that part. a rates call may borrowers’ XX and accompanied pause indicated I think have seeing the And a will have slowed little we on the there it We demand

am not overly So I concerned.

competition the in space I bit. of think amount the down little is a

is floaters, the that result that’s quite the a which for CLO a like occupying in lending time I’ll but business the operations call of is that of it lot think I bit York. -- conduit and is is because of conduit emerging the market other in New

a So bit. little the with securitization is actually spreads rising bit down I are a and rates out business think little

in as been close of this to as reasonably healthy. on, I think going I the that this sensation should have flat be that because things But of very I wait sellers said, each well other curve. on do the part rate think five see and is there as the buyers and year year XX

slowdown a think I in are rate we we the fixed it’s I really But it’s businesses. floating will naturally, think pause, rate and So, see. the don’t a but active

Steve Delaney

on question, I kind one valuation. final price touch And the to of and want stock

discussed these It capital that into value around like the given stock? gains prepared Company seems something that recent doing remarks or versus you thoughts about and Can at levels. the you cleared core generating shares sales pretty proposal like possibly pushing a allocating statements board the significantly of just towards undervalued the the of at Company How offer reflective stock regarding significant repurchasing determine guys the are coverage a like you’re that that, in allocation on certainly know I the talk the have. you portion not between feels the the something like business repurchase is repurchasing thinking looking stock little was about you capital You or the buyback? dividend

Brian Harris

Yes, think statement and agree with would I sentiment. that that I

our we fourth not but we capital what to shares think some pretty too is. cost repurchased I -- of the in had are many and quarter although sensitive

quarter, we think a very the and I had we where earnings In as a quarter when first XX.X. had it, last ROE. -- think I we good think our about capital we allocate

pretty capital well our So dividend. obviously comfortably in we places allocate are to excess of finding

However, are the is REITs we REIT phenomenon I opinion maybe space turnaround, with in EPS. lumped the of that the am in sort one the cycle that new are of this

that if don't our other well doesn't think do can’t reward struggle I REITs occasionally think ways we shareholders. I mean find So but we to also, that

made it past. type It’ll but some long if the do we’ve previously with occasionally estate harvesting doesn't the do a over real we will million to which say a quarter, XX ROE a be securitization same event think the is that you those profits. it million now it over the deliver frequently been and is have X in well returns be quarter, supplement online, about think the XX a than real that have it’s gains. in I the and we binary more I does, see XX we is quarter. wouldn’t it it We every business -- but this XX you said we’ll estate, so that portfolio, conduit is coming which as it, way fourth So other run literally -- I will sounding work product

capital. We have of plenty

us. that the any I see issue imagination, to need any start think don't appear So do shares but does stock by cheap our to of I fares

expect this we we’re with and allowance the a That's to come have any at there’s be peer repurchase happens constantly our -- of we look when policy, not that stock of we’re predictable. that rest depending good happens XX our and on that, a out the on We level will what also prefer we point we’ve haven't at we dollar in would plus it earnings very REIT ratios But I stocks. used, in having what regular basis. we dividend and at this We clearly on take a the million -- a one coverage want would certainly highest position rather don't I a point think where the meeting revisit to difficulty fairly set. chance

in consecutive So I dividend when if, mid-year to raising a I certainly is that recommend want think wouldn't normally a and quarters. about while not the question cycle

bit little the reasonable short-term going I raising continue moving the for rates path they’re be on, a very sooner. is they think on if a and argument interest set that to there continues

Operator

you. Thank

of go Our the next from from ahead. comes question Tim Hayes FBR. line Please

Tim Hayes

macro see hikes. gains, all just do year estate, continue see that kind conditions would of capital that mix kind seller expect opportunistically lending real some rate assuming and and more we like helpful? allocation around looking of persist. to as same a be securities to at just be you And from redeploy point? the harvest any you color at of couple Or now you Should Looking a we sell just business? the into net How that

Brian Harris

because us. of next deal be to a to we that Please conditions turbulence little going during bit understand a markets are to think bit with sense been tell lately. things Frankly, conviction realistically place. a We quiet have quiet, more an not and about going are few it with But too a just there’s are future a you me took it’s comments that that feels have the the got spike little quiet, a I there interruption little here. front I’d of lot little in of little a market had be that the in the and been Vicks me I like bit to bit

quite securities $X billion it’s a think our down about down So is portfolio bit, now. a I

be the $XX of They a Interest priced. issued being that, rising aggressively for diet any oil seem people kind purposes. turbulence around to yield should know but when spread been nervous, to or we a after last precipitous pretty of spread quickly not been prices bonds seeing some bout there drop, recently. have barrel. place stand making that any that’s widening a high at taken fell I some took be you’ve of very unforeseen rates ready widening to have We have The

in all factor things allocating were that are we to what capital. these So

a the loans of I rates point, loans types be point will but that where the have acquisition got think a from you do very of refinance have maturity conduit book demand to some rise, channel I think two channel earlier there’s in doing a property now at really been healthy securitization refinance. recent as unless is has as I is and you adding think rise. we’ve some you that. this rates of floaters We assume think you would bit disruption do The that in there the slowdowns a to a keep like of there the business I might I At mentioned one date because interest a that channel or refinance reduced else fact the quite voluntary business, somebody the are move you in securitize purchases rates. benefit

if So any get think volatility. I chance a going some there’s if I to look a year, to out over securities we’re buy

go and healthy a target imbalance. little business and reasonably as a shooting of everybody rising a really going lot falling volume it in market think I we conduit supply it’s is lending bridge think of the but of the competitive be because think is the larger business think target creates to a the a rates And has business frankly some I businesses. and mainly and as after is at bit middle I players loan different demand I loan

in So estate emphasize warehouse in bought Yesterday in purchase we of Santa will Marc stay them today, is million ways. but housing expect $XX have one on as some we or an different differently Barbara. product because we mentioned, we million Atlanta. in $XX though to real would an them interesting a purchased, settled we The

the happen finding equity opportunities of are sometimes rates see $X think I side we real have so us of they equity plenty rising. to that we estate because to are portfolio in So sell will adding billion and people do while

estate, opportunities of to in recently. real more we always just there’s just be happen seeing them So

Tim Hayes

position mind sold But a how like properties estate just sizing you just more real guess the even on or to you’re going portfolio, are would to are I you harvesting many be And kind identifying be of now? adding right sounds stabilized it of as your in gains. there

Brian Harris

our that’s for that an think sell warehouse even operating that before that partner our that a take try the capital, somebody ground on buy is the rest There’s If very the events with I TRS we a JV Atlanta we and we're what put that’s think vacant. financing loans we there on Well, and year with throwing because portfolio, XXX% the to and we think did no are quickly, and are partner, to to assumable, to those back of and it I we lease would XX bifurcate lease would those business into our -- XX a I have are net all actually we $XXX about average XX we wouldn’t for REIT. that I into going active usually financed call portfolio of we vacantly with non-recourse take million years. portfolio -- to is proposition a all the we think that’s leased about returns. that’s we home not We lease our us. off opportunity building quickly on We value-add. those, it the park flat in put The think But maybe yield sell occupied, and occasionally I could to presently -- El will but don’t mobile Monte where with think seminal curve will great that it’s of purchased we does acquire call part what we get But prospect. value difficult JV, together but calls require value one involved quickly. have effort it hold close. a make place ground, instance I there, needed We it continue to get want double-digit

So quick was turn. that a

and either. there’s there’s holding selling never any that some coming a income of things, of undertaking. opinion So, but that the where XXXX, to assets in been off. spent recurring generates coming have our there’s things properly or -- nor lot -- our balance leverage we year and about selling opinion we going format in don't -- lease I about would lot call getting could generates going sheet do forever to lot onto income effort our that’s really be immediately and REIT belt, we’ve we real and estate that have a today. a loan optimum good be a safely business things And we’re It an been we on, an some conveyer portfolio, position

So reaping and will we be the stock where to our trying year spent investments, profits most up a on time of value. price shareholder XXXX with move

Operator

you. Thank

go Jade Rahmani from line of comes question the KBW. Please ahead. from next Our

Jade Rahmani

In you do terms the of think many rate that share diminishing REIT overall hikes absorb seeing market credit can performance? how we start before the market,

Brian Harris

think still is to be times as rates this I number to of it of easily I the going more then and may if there’s not higher year. that’s there’s I if is will that probably I I of from rate. I end government the could would the I because a be into fed and in are opinion they say interest the wouldn’t it June, phenomenon place also and three to high too going out suspect realistically and it well economy takes much I borrowing that at go too -- year. the that. trouble I’d signaling demand the is I there’s -- that they doing and rates the once gets then much very a am think all opinion that’s up crowding demand do quickly. next believe much times possibly I because four are -- surprised and think But if would four too raise them up money going think the they am are more rates year But is going because

think is purchases to real of problem or or loan estate don’t cause making loans. here a And far going in as bridge so, I equity anything as origination

reasonably I think doing economy healthy done we’ve okay. that's a

any as tax the repatriation. think in the downturn was I economy forestalled cuts, well potential by as the

Jade Rahmani

additional in To you slowing, could rates? a market is rates the worry the slowing, cap trend start on growth of cap fed to rate sum seeing widening. NOI growth that be rent starting continued any to we’re that hikes could pressure on so side spur the Are upward emerging REIT see

Brian Harris

of some, obsolete. of become square there’s side of also I pressure, been say time, long to in very so, technology the artificially low causing any would rates dramatic kind had also interest I for footage were the Yes, wouldn’t call but things but you residential lot a built retail of I business, multifamily, believe and a especially lot it were

be doing to business seems -- well. the office hotel converted some and So and

also, I of I side, do is feel the the but tight. apartments' think the push pressure see do on side I in industrial and some So the retail some especially upward side very you’ll think market

Jade Rahmani

funds -- the all most compression range? of the of terms mortgage debt in this market fund to have point returns the because would start has tightening, spread yields And so below that bottom dividend take Do returns pretty from the seeming funds debt of X% REITs -- CMBS. in shooting that to reached share similar And spreads, lending its to you kind are with feel leverage after further X% to with the for at we that.

the you over compression like have last of kind course? of we spread has the six run months its most seen feel do So

Brian Harris

think don’t so. I No,

went at a of a think couple actually I into but last of back same little the say time, went of XX for phenomenon been Spreads taking a for period the widening days headshake rates may I would bit or growing place which the equation. have down. a certainly so time, and then they be up

they at compression were have fourth earlier February different much in look rates when borrowings quarter. took place didn’t outstanding really So that spread January, it the of it, you absolute some part of the from than

we mean the I like are LIBOR our X.XX% way the in XXX today, XXX. plus bridge up between plus And really portfolio all at it gamut the runs X% we loan conduit. for to to are looks So a LIBOR

little the the a to their I money actually as a more in repo. lot that And large which the a is loan raise their some rates and CLO borrow a really am of the in I to banks business the not borrowing at model of loan that’s originators of bit CLO that that we’re lower surprising. seeing repo And the think pressure CLO little seeing many bandwidth rates but reemergence rates a putting I largely banks. employed frankly afforded in of business. too lower of what little and where the on many, result than is early were the REIT the the that we been capital market There’s It's think much cycle have bridge than fund. bit

So, rates the there. banks with are lower responding

for will it going think So I a keep while.

with rates. we I of borrowed bit money long-term to more the think right as at hoping lower are a you And than lot model continue banks we the long rates. over as can lower their long-term decision. rates the repo the will we a corporate opted repo But spreads where and that go bond to be higher

hard X% So becomes not we sell us that at a and XXX at of it’s dividends do and to LIBOR impacting being see bit loans a are leverage. a X%, without XX% of but what to look pull at I XXX that lot made off

avoiding that. are we So

Operator

Thank you.

line of Rick comes question JP next Shane from Our from Morgan. the Please ahead. go

Rick Shane

would seen you from on say P&L? those in sheet the that quickly, loans weak what at gain sort end towards balance as -- sale lower just I historically. business opposed point at on what you model, it's of put the given flexibility the of we’ve do looking Very guys Brian, the

Brian Harris

where of allocate you on There’s that lot take right now. little every market right the And to conduit distribution day a are as bit we to difficult side capital. products look at the want is we a a

moving lot even getting little some and a are agencies You deals around banks the rating their are models seeing are and smaller of of bit. what seeing you together a

we’re quarter at business is on bit going but thing and there. in profit in surprise in usually is second anything conduit fundamental experiencing tricky the Spreads the a all But to So low that. seasonal a business not hit the conduit little year, their margins right tend that’s now. the it’s a that’s

was fixed doesn't I done second year, market I inventory well of will just going on quarter. typically, side things. income came had think and Stock overdo to last in that think. overwhelm New lenders And the on reallocations Once so everybody it all the Year kind the were And what’s that’s there. is buying buyers. the the But last.

I think is temporary. this

go and a rates respectful want continue of healthy. money of weighs them that our said we’ll higher, to loan have discount. environmental, means. tossup equity any also, I don’t I our our look we on it’s some put conduit sort we certainly when think and sheet. we ratios look even balance allocable to those would to very bonds would where I X% so we need keep issue. do The around in investments as dividend where be sold put that’s of we acquire X.XX%, to that we to technical are at on a outstanding there, that at by capital, believe debt And credit a its they high our think a in stock But bondholders the with be issue I and lend X%, market rate and a if at is

but business the as our So that in still bridge capital we would well also we business think is best loan now the go right for real business. direction, the estate as

been there's of a but pressing on to far direction. couple it, change so And points nothing

Operator

you. Thank

the from BTIG. line go ahead. Ben Zucker comes question next Please from of Our

Ben Zucker

properties Just Or heard is Could think income? are correctly how real should end, like a making we single-family you quarter million $XX subsequent you you residential I quickly, investment homes you that some said of portfolio a on about in if that rental to California. investment? rental that little in expand for that just

Brian Harris

a Southern think Its and coastal XX student -- its over little housing California. I its properties, it’s it’s buildings, over

it $XX We a buying are party. money million. We third ourselves from for borrowed not

deal. is $XX million equity transaction in investment own only the about equity of the in our and I we So, XX% think the

Ben Zucker

have I'm much this was that you it you of free now? kind at about, capital. portfolio the much fund only then wondering to XXXX. we do down leverage how grow the to room aside I there how overall a up capital, selling have ask new just because I'm the growth CMBS the throughout throughout time? have impressive longer And kind How just reallocating right of higher curious now XXXX, lot do continue? And lastly, right sheet can seen capacity guys investments more know just from balance I much of but of

Brian Harris

we equity But mindful grow have just of of we can of to now. do ratios right continue we to and lot safety. margin a be debt have certainly liquidity to Well, and believe we

what you a stock at add back get have start if a or lot of all I we all Obviously, in assets but it, these of of billion. very still so we and and you look buying a mind think all to in not worth sometimes if environment. rate a worth falling duration, X impacted, all have assets short them, we you keep of million but have in -- experience probably $X security and can almost billion to $XXX of easily up they're them

talking go opposite our high As and about as paying off right banks and the by low we in the they’re are fall, loans the you now, earnings hear well going rates off. saying on paying are loans that years analysts coupon will actually have coupon lower bank

So of dollars securities loans of and hundreds that of match we millions are have funded.

X% don't off we’ll those think X% but down, be on higher they’ll they leverage, are but and funding funds upside reallocating I rates you So match type them X.X%, fixed, fixed put were into be we lower paying those want also and against rates about assets. perhaps,

to -- wanted we think we if if So wanted ratio. plenty we’ve to got debt and the room redline equity I

We mistaken. will not add $X We don’t do, billion. be could a

Operator

Thank you.

Bahamondes comes question from Bank. next Deutsche George Please of the ahead. line Our from go

George Bahamondes

And monitor of some signs quick on also, clear a -- watching avoiding? that view of have question maybe you’re Just a things or geographies of touch closely classes if you most you can credit. or on asset the ensure closely to What downturn? credit early you

Brian Harris

transitional a assets, large monthly the business plans basis. unfolding so see a all have over portfolio of we we country Well, on

little them really by So, had my very upside. we York hotel I New strength a a in and that. hotels a is sector we having but bit do think the hear were weak saw, of impacted When luxury tourists opinion on keep an The you the dollar the more can eye dollar. problem, weak back brought the I dollar, in

think a the on that, accident metropolitan least own in not direction, an yet. didn’t that at done lot So had I the happen, major Retail number cities. possibly was wrong of is animal. heading but it its Airbnb a

and have supply look versus You to at demand. that

worse. don’t So you that do look can I tell that something retail know I I makes that

consumers at tapped look you think. and are pretty out getting think I consumers I

an lot office the And initial -- so will that densification But of take But retail. product is but a and so spend apartments. there. is business into was a office market turning there

So local is York instance the and trends what like deduction New places I macro of the worry New in state loss for about recent more tax and like Jersey.

and a because be in we of undertake hesitant because to that a asset to is things for a the I we housing pains policies. flow that problem loans are that increases going big cash are place. do already is lot prices pressure think no think tax on require very will and there of Texas that Florida of believe matter, We northeast lot state absorbed taking their that do those and benefit are values

look have going to we about it. example as on what’s So, always at And concerned that you every are to replacement cost. around

seeing things street. than foot somebody But on seeing So we we problems. a not not when are can’t foot see the them are high that, environment dollars that’s that build for something are per just less that much you blending across dollar build that makes another we one square can very when we sense credit safer

to and that plateau. two prices talked been I drive hotel hotels yet a I seeing as a out credit do lot I will little probably something are be soon, gasoline the will hasn’t the wouldn’t think a about there of think bit We say rise is markets. but businesses continue flatten problem yet

Operator

from Ken [Operator Instructions] Merrill go America next of of ahead. the Bank from comes Please Lynch. question Bruce line Our

Ken Bruce

the and and the enhancing end, that have of asked coming is been I would shareholder like Just guess I revisit there’s to one at answered. to that. most detailed questions really value

basis solution? your would the the relative and most in stock? -- think am happen this Do hearing further suggest think growth, on consistency occur? I would to what the to peer you that's don't discussed the on dividend that into stock. you its happen us value It’s for undepreciated But earning? needs interested above like for of needs valuation our be what and work value can market think discount the personally to book to substantial You’ve I consider an the Do absolute it’s rerate a do considerably to discount group on company basis. to for to what feel buybacks think you the that rerating you of do

Brian Harris

think and fall ETF, story the never those on I time our of of to sector the also. is last peers algorithms deep daily give shareholders, tell being the if are in on up I something a algorithms companies call basis questioning, and funds perceived that much sometimes interesting our make money to and day. are is rise those fact debt, think well at value of much see and is ironclad and I see We our managed the asset here that. and class open the allocated Ladder for with me we’re to live stocks because names, cap, they know we than do three internally I pay been this through that higher just right don't that at the those in to are to And rate think same do investors might We’ve off theory it into with - all I that I question lot just the market are proposition all I I and usually balance too do before. ETFs company, happen, went peers, of a REITs and X% have ETF I go safe in up factors, thought from interest we got walking about dividend It’s up was secured, how know around largest that’s but X%, a out-of-favor as certain -- you moving at I but up when down amount and down REITs we I a think inside to the dividend a run REIT information that’s and and half percentage and because pretty always while you'll sheet, is that when We’ve can is meeting volume. we the by don't people the would a lot that company raised they tell realize would a but the available school plenty that haven't internal ownership. But believe subordinate attention some buying consider think spent that be what attention first you sit you those bond income driven that’s have met are rates take and peers funds externally run a and at to make capital where really Ladder what were they’re to the seen And see regular just look checkmarks into capital. and account. -- internally dividend them this secondary appreciate lot our I redeemed, basis. a because finally on pay at I raise rates managed grew to everybody them of I never do market I REIT market opposite much have that rising. screens a or inflows we increases a look a And average of and if that value think theoretical own And and you’ll price-to-book when you're very they received. largest tell, or There find don't but and our and we that knows, sector my I and they been very purchases X% their if efficient also -- you anybody senior and and REITs to shareholders -- market level, And and ETF if be if be are one our morning markets that is of perceived a available rising we've and something

are would that’s picking that managed I management externally model. do why they think up. REIT, But So that? asset typically an the under algorithms an don't That’s that

to set So as right we our our power. the last as I Pains liability think -- went set to got balance really I product year, that asset and earnings sure to optimize we said our make up Great mix. sheet We’ve could we

shareholders. I understand the says, think because do in that. are for reward investors to can think and market wait efficient the could don’t because I the of down. to wait I model going fed anymore we’re times, they’re I rates think go raise self-help analyst theory now don't we And our four we REITs going think to

goes City that’s why I down with exposure REITs why think Now to a understand hall that by understand mortgage a do down, servicer they residential of and I it. than don't get go I nor LIBOR assets mortgage understand rather and lot go, down. would But don’t down REIT go why fight I frustrated

have I and pick create, think to instead those waiting very buying choose to themselves. same for our that correct we patterns them opportunities

I So being that think of XXXX a lot more active good will a part we in column. shareholder self-help spend the reward

Ken Bruce

with the the That if about in is bad, to I rates. both are what yield concerned guess you and selling, am good little favor indiscriminate that’s I sounds a leading stocks go

argue Some to essentially it direction? going public as And I of to a you need think see strategic is related, know company. for of having But about you that different that you I won’t address kind would Ladder that. what not frankly ask don’t to consider want

Brian Harris

investor we want of have that circumstances met to it’s we a of us email find yet. feel that the they dividend a an private Well, that that the to they to I X% world yield. retail certainly with haven’t And open classes up think from safe really side didn’t investment go we under lot at who hard take very felt any because

run. I X% I know we look, what how we get are. it Company’s and we our Now, But shouldn’t tell operates but know to yield lot, dividend worth. the walk that that we prospects before know like them a like down We be X% to have would to would about

up get probably office we Ladder into walk proposition should and don’t cannot haven’t and I and walk never they’ve to because if portfolio you a the them. a meeting. algorithm buy how shareholders them we I it separate the it met never and I because to are don’t do residential from But we value they convince there. called and -- -- never just here know large They an can a as out him mainly to buy explain rather I REITs. think I I that manager’s in ticket shown talked

rather that -- is than think new this I phenomenon. a So

are think easily ETF make the higher high many there’s stock public. investment our general we it certainly do market available I us it. ways, plenty not of in mean wanted that but that think of I opportunities to covering and we with if could feel acquisition dividend I there I the a much But for think rate place is the I to.

need and to with spoken all data available retail really I to their And home of the does really we the doing way the think we side start business be bit to at to And so can that. the talk that more. people a may computers them on have to

time investments We REITs difficult say need well feel or institutionally for does in that for want run will down we very be who get because market. company now. They also pretty wait safe But institutions will I been XX% little can certainly be. market FANG's we a a down drop and we will lately a does I in don’t and and well but think owned -- when stocks I continue fairly think a to and XX%, that but in turn, the to have popular the

think in the And So, an I on think think weather know make every going know a how the keep dollars avoid always we think don’t I couple a how credit. of We we today. quarter, we don’t a leverage just check and seen plus are I million we over but focus long we keep the quarter all I one last We don’t as doing REIT. problems. XX to that you’ve quarters. XX% to are ROE

we And will have setting think will shareholder our either that Those helpful approach, us conduit to money I institutional and rewards. up those multi-cylinder of towards and that distribute about out been have possibly just make dividends talked actually more believing special portfolios We'll we very never have some our we but continue model most to so in a we companies, been as it. spring a think when to of shareholders buying along. into and the the do feel real like posture we take I estate those aggressive dividend

Operator

no would floor time. in like to have back turn we further management gentlemen, to at and this closing Ladies you. queue comments. I the for Thank questions over

Brian Harris

little to had lot today. forward with want you. getting a we talk just you so catching I thank time. look We on about ran but for the to up probably later, call a next everybody to with us Thank it

Operator

does Thank you this teleconference gentlemen, conclude for today. ladies and our

you now for this time. a and at Thank may your wonderful participation lines You disconnect day. your have

Ladder Capital (LADR) 2 May 182018 Q1 Earnings call transcript