LADR - Earnings call transcript Q2 2019

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

Operator

Greetings and welcome to the Ladder Capital Corporation Second Quarter 2019 Earnings Call. [Operator Instructions] As a reminder this conference is being recorded. I would now like to turn the conference over to Ladder's Chief Compliance Officer, Senior Regulatory Counsel, Ms. Michelle Wallach. Please go ahead Ms. Wallach.

Michelle Wallach

afternoon President afternoon, Corp's share like second earnings to XXXX. me Officer; will will our Chief good and to comments welcome quarter and our open then With questions. we about the up Marc Financial Pamela Capital Harris, Ladder and Fox, call call Brian, this you everyone. Executive Officer. to I'd McCormack, you Pamela of company's and the Thank our Chief Brian their are; for Marc second the quarter

the This quarter company's afternoon the The is for quarterly be we released SEC the our with Form in and website financial earnings later ended results the on this Investor available of will report XXXX. week. June section our Relations XX, XX-Q release filed

begins, and like call of update duty not differ results. recent description materially to that some everyone that call to our a forward-looking our Actual implied the of may Form or we I these call expressed most XX-K statements. remind I'd on results for this statements. risks to this the do affect from may refer include you may any Before undertake those

this We'll certain to non-GAAP measures also on refer call.

measures including in our to Additional these available earnings comparable of a is information release. website GAAP measures reconciliation our most and non-GAAP on ir.laddercapital.com

I'll that Pamela turn With the call President, over our McCormack. to

Pamela McCormack

million earnings share $XX that equity after attractive per XX.X%. for results annualized or of this the and report generating delivered pleased on Ladder tax you, to core I'm average an Thank Michelle. our shareholders second of in quarter return $X.XX in quarter

our us XX% payout quarterly a to with of covered well remains retain of XX% earnings. dividend allowing core Our ratio

on activity continued earnings, characterized loan steady was origination focus and by with investment credit ongoing This metrics. strong a conservative quarter

approach has quarters. for multi-cylinder consecutive produced Our nine returns double-digit

rated volume. sponsorship trying liquid with highly as highly Our allows credit selectively to loans and into to to and securities force strong originate us deploy fundamentals capital ability to opposed

of has loans. primary mindful our relative of underlying the our of to that to on our we on continues majority to is focus and sponsorship, strong the While the value emphasis fact bridgeable been continue estate collateralizes basis, be real the so of the we comprised loans, loan be market that non-recourse

allows best and We well attractive generate loan this risk-adjusted take to as themselves. us returns advantage the to positions approach believe opportunities us they present that of

and Our to We was made earnings Credit assets quarter million from investments as our XX. the June an new billion of credit continued both totaled assets in well perform and $X.X $XXX of stable. perspective.

year $XX.XX, Our up undepreciated ago. was a since by book per value X.X% share

to transactions our to now the produced It enjoy conduit Turning $XX.X of in operations securitization million. margins. contributed gains that two loans mortgage to conduit business, continue million core healthy $XXX profit

million originated loans of the $XXX We held securitization also during quarter. for

us. business to for strategic view continue the one a We as conduit

timing varies to in best returns. the While durable $XXX gains. million we've a very core loans business transactions almost of mortgage Since and be proven it highly offering of profitable securitized the risk-adjusted has billion securitization realized of $XX.X and XX inception, often

and quarter We $XXX balance million payoffs received of million. the to loans sheet lending. $XXX during Moving originated of

with X.XX%. positive movements our feature for in of of to has our rate interest shareholders. LIBOR exposure The our floors All floating-rate rate presence asymmetric to a these weighted which floors subject a book in of interest loans consistent a a reflecting average been LIBOR are our X.XX%, makes of our floor average floor of LIBOR floating-rate weighted underwriting way

be share income increase approximately impact a net quarter. in $X.XX U.S. per the of interest X% LIBOR the quarter. would per X% decrease Reflecting a per share per $X.XX of approximately floors, The by increase offsetting impact would

fixed-rate It a a sheet XX size and million interest approximately months rate an balance of loans $XX weighted portfolio million. of billion $X.X average of average weighted loan of includes X.XX%. of total loans Our with average has maturity $XXX also

attractive In are opportunities. to see loan addition, continuing we

rates target we that our pipeline expertise invested are We asset a in loans continues believe us in midmarket conditions. exposure million ways the over to capital by choice that closed and creates believe roughly our while already the expenses in cover more of remain changes loans. allow forward third while approach bridge $XXX locked and at XX-XX portfolio same in have We've and to our required robust maximize valuable to to time heavily market to the providing returns, conduit which assembling reducing our redeploy frequent between macroeconomic We underserved. diversification and interest maintaining opportunities infrastructure and quarter split

mortgage Our call, investment earnings our On we and this us XX of highly and businesses securities highlighted rated from securities holdings differentiates mix asset over increased granular competitors. AAA-rated liquid into acquired in-house the and our XXXX volatile our highly last at government securities a produce U.S. in during backed market are is conditions loan first to originations a average XX portfolio our securities weighted end experienced agency the months. of duration XXXX. of XX% the or with comprised of of by of our half

acquired four investing in second these quarter. quarter returns, the million million $XX.X and and our and market of volatility businesses short-duration to Our other maximizes weeks an $XXX the of rated price third practice first flexibility when the highly in capital of as reallocate additional minimizes consistent reliable securities conditions change. in securities to provides We

as debt to senior middle more asset two our while of to Marc and that targeted endeavoring three with industry-leading base an consistently continue an near will maintaining on structure As times shortly, we demonstrate our liability this range. secured to we the all times increasingly as quarter equity further lengthening platform end we our of ROE to strengthening elaborate leverage by also distinguish are

in sales Brian have the that in as the and franchise unit further fourth in Hilton we conversion also now a Avenue well Beginning million I Omaha estate-owned mentioned hotel Second follow upgrade is we quarter, $XX.X hotel million $XX.X Condominiums the up an On report our call, website. have in the listed and will am assets is agreement the today, certain under our our The the reached by last Doubletree a operated portfolio. to regarding pleased exposure underway agreement. as flag we Nebraska. reduced to of on from on from be to would new real hotel Hilton XX-year our

that, I'll With to now turn over Fox. you Marc

Marc Fox

share gains and the Thank in this you, shares. core million quarter, of $X.XX and the the modest recurring sales Pamela. and income we XXX.X paid securities gains sales. real $X.X of on complemented $XX.X cash income on million million interest In million of of totaled estate gains equivalent to second net loans, From by $XX.X was per income income, of $XX.X of net sale from rental on dividends, forms million

sheet balance a to the loan commercial loans of approximately real and commitment to disciplined the the conduit underwriting estate quarter, totaled reflecting second end the stood Turning balance $X.X approach risk. portfolio ongoing at to $XXX billion sheet. At our million,

mortgage interest X.XX%. on weighted X.XX%. originated and The at our quarter spread million, loans loan the LTV the loan loans with of June average both average balance sheet weighted approximately average on during in average was average size our line $XX rate approximately loans was balance a was prior XX.X% quarter the reflected originated The first XX, in interest conduit XXXX, The of approximately quarters. sheet rate on

XX.X% $X.X During up billion, the since prior million securities grew and end. XX.X% quarter, Ladder's quarter since year second portfolio $XXX to the by

of Ladder's senior capital investments our Senior XX, cash, total of reflecting top asset XXXX, debt As June XX% were the comprised secured at investments plus of stack. XX% the secured. our assets, base, continued of

to of equity quarter times, We of ratio X adjusted X.X an with historically to the to closed debt the times. our X middle of targeted range close

Excluding adjusted would reduced total and of liquid debt our to highly rated securities, times. be highly X.X portfolio equity our to ratio

weighted price we of shares, $XX.XX. at over a also During average the just quarter XX,XXX repurchased

$XXX Finally, the new over available investments end at we million the had liquidity of quarter. for of

manage Miceli, expertise quarter of we team. relevant directly our our oversee experience daily the as Ladder. of accounting industry a operations to Paul to finance brings also and reports and the and to During wealth of me Paul Director and hired Finance,

that of towards for recently Moody's, major representatives over is noting their the S&P significant Before criteria to we progress of executive made joined and meeting through of in We existing team agencies, multiple an Ladder the its rating and to turning year it you have market highlighted positive that fact with cycles. over inception of XX the thought all average leadership of experience Brian, discuss years action. met each ratings collective members possess we of first and worth the Fitch, management

investments highlighted in average our further and a senior status income, growth $X.X XX.X% of core reflecting and an our over of record earnings track inception. since ROE cumulative the We of billion secured recurring significant

investing risk-adjusted leverage our throughout X and real we done We do core estate returns. would of said capital underwriting strengths the and everything X best have in since to stack consistently to for sticking times commercial inception, including the maintaining we

we As opportunity years' industry that Ladder of an franchise, tenure managers heavily has invested our XX company also averages nine to and senior internally group managers, managed heads the took of experience. and team at building agencies. XX group the to larger capable This department of in and years introduce our

We have rates impressive and has a resulted larger personnel long-term tenure that in employee we stressed in planning and made the among base. team retention significant that investment recruiting our and talent retaining

several we next and as profile remain funding achieving months, focused positive action. the our Finally, improving look we on over rating

Ladder's rating week, outlook proud to are fact, to Fitch positive we In last stable. report from revised that

progress less secured the debt our quarter debt, on and end. early debt which to on forward in as progress measured ultimately of percentage continuing this quarter market fourth look our conditions, of of has of continue assets XX% stated front, to reducing than secured we reaching third XX% of expect our or total target meaningful XXXX. secured We as supportive assets total to resulted a With in

feel but over for goal position of earnings advantage should to shareholders core balance also our We and and sheet, well prudently not this deliver time. will growth continue opportunities to take confident only us our strong achieving sustainable strengthen

I'll Harris. now you to over Brian turn

Brian Harris

Thanks, Marc.

solid The of more earnings. at second quarter was very the a Ladder, with with our very and pleased quality earnings, but quarter importantly those overall I'm

been to and investment two were expect and conduit. in our three we the These to Over continue. securities we've the last increasing well quarters, are that lately we signaling performing businesses you time and very actively this

We XX have months. securities last short-duration highly over $X.X acquired liquid the of approximately rated billion

to and next securities adding our support these years, us will with to the expect already We covered levered XX% further liquidity well provide dividend of returns profile. for couple X%

embedded a improving. overall costs in been On have we have this spreads and credit mark-to-market interest funding as position gains all basis, rates,

be into rotation to appears timed. product this Our type well

product our XX% lower happy Our quarter, to conduit gain profit also despite it four profitability core see this than in margins has business And the product our are our to strong. about contributing we years. volumes, across balanced contribution are all a With lines. of very earnings is to on sale better performing in more

short, excluding multi-cylinder equity our In evidenced X.X very time or by at as debt-to-equity adjusted as of times is mentioned XX.X% performing our our just this times conservative on when model return nicely Marc X.X securities. ratio liquid a rated highly average with

half that we see structure As opportunities second we rate into year, interest hope look the of we to of we out in given are some low potential the capital environment advantage in. also our the take

is have longer borrowings lower our rates to certainly the to and and corporate access replace market, don't as corporate with the may corporate long If five we a repo maturity look pre-payable eight we more as before debt we seven, may with need While with year-end refinance debt of that also we market outstanding, we unsecured borrowing some can look dates. term. to replace that issue welcoming debt given bond that

value increase While may diverse consistent we debt, amount percentage capital with significant a a strengthen These the our are this have efforts XX% a debt of activities we with Ladder. our of that long-term already believe to shareholder bring near-term structure at kinds to of liability opportunity total we our structure. have ongoing unsecured to

to like that to Weiner to and mention David working their I roles. I'd Directors have of look we and our added with Pamela closing, In in forward new McCormack Board them

to move questions have. now might over can you We

Operator

question. Please Securities. Instructions] Steve our first question with with of And your from [Operator line Delaney you. with Thank comes proceed JMP that the

Steve Delaney

Good taking to I'd the with start conduit like everyone. Thank question. evening business. you the for

million. You of June good in but there had XX, was the just anyway activity a over $XXX quarter as little

conduit as half loan on the one second what you could going production a maybe reasonable a several loans that have the in you're see idea pipeline some books, talk bit you you half? third be little into of building whether quarter and Beyond would Thanks. about vis-à-vis first of a to level or the

Brian Harris

of have we the Brian. closed of that than been discussing, were you -- activity a very a there around. Hey loans say large, that. the very Thanks Conduit, couldn't Steve, for its It actually not with real of our fall a due legal large would lot couple large anything conduit question. the of lot I We should we a estate. that that tell quarter I just stuff that in out diligence we wrong for had couple was reason any had wouldn't higher was structure

had also. we pretty at rolls a understated do we as third bridge includes side of quarter of on, also And have far we've -- pipeline good we went. on bit loan got the conduit been as also what than bigger quarter origination So, an that had the a more expect as assets looking we before. And there

Steve Delaney

become that and people they to had rates? in sort cost? sitting Do the trying Is with start to you is sense these historically anxious when fixed from that a last floating, we've communicating on in a rush months this so, they do or their into -- rates loan six there of are rally off there lock borrowing XX-year bridge low move seeing up a of borrowers

Brian Harris

a the in last go business transitional no There regardless they're quite plan stabilize wouldn't matter that rates not because they is. least for groundswell call have I at the if tend low bridge accompanies are standpoint what ready because been loans while they happened rates year. the property, to from the once a of what's of usually lately, it

would mind we've still expect go. yes, -- in of months, tell more last probably activity low. in wouldn't lower bit keep I are there the Because a XX But is rates lot little you over So, it this. rates an a of impetus I and because to fact isn't seen than

Steve Delaney

guess Sure quick X% I then Lower than was up stock's year, well to done the -- finally, just XXXX, a And XX%. yes. too. -- okay. to this, this I one

Marc back I when I that shares, heard by intrigued some bought that. had mention So, you was

is it your spreads your it's dividend just way need And tight, that you've -- my sheet will capital market if possible balance is at CMBS that buybacks? get a as high to growing fact, or manage you really is question ROE, there look it loans that, As as for you you at provide you opportunities possible at doesn't whether ROE your target the that and just in look investment look buybacks opportunities? enough and so been the

Brian Harris

a seller as ex-dividend our bonds actually there, in an the of shares kind we as before and a our at possibility. the shares, it's be step it because was around, a not Our looked right general into impression of there as because stock when as stepped we our like bought are to the do was we date. say in in But we we I market market a will looking investment quickly something always can think $XX.XX It I well those around look a so that capital-intensive share. acquire we market we're a moment's business, and because When deployed notice. laying in would just have capital capital

times at market competitors trading the taking own ratio. looking we kind that number, ratio. look REITs as though work value as we you PE it's premium So even $XX.XX PE of of a usually as the that that doing at think our lot at our as we I book at know because ROE large stock. stock premium when think And at to of value. to a trade a Ladder's today, a a a don't at book a which been we've where at well But that I give look I is were XX

also. at REITs, low quite relative in us if also count we're to that you look other But

we a we're But stock the and absolutely attractive, So to mechanism it looks step we others off don't still take there. because we in then normally enough volume. is look won't to and market, it relative it gets I if viable think trading daily think especially will cheap

Steve Delaney

Brian. the Great. for Thank comments, you

Brian Harris

or manage our to it though do capital no. don't We our ROE

Steve Delaney

you. Okay. Thank

Operator

next Riley the your proceed with of question. B. Hayes question FBR. Our with Please Tim from comes line

Tim Hayes

quarter taking as more just pretty patient repayments Hey, not or my Was the quarter a first good with should here in being Thanks timing evening more thing the with that into coming little balance, bit a holding onto you high guys. Brian for later deployment? the read one that end. cash cash seeing capital loan returns My questions. we just and

Brian Harris

I it's basis. levered ROE on we think the which quickly can an to X% will into payoff because addition, in generate XX% deploy side pretty a securities,

have part. not and on to cash of the we a towards it So lot deliberate of at quarter end came our if anything happen probably in quarter the end,

Tim Hayes

about how as harvesting built some to mentioned capital then securities you And nice in that more portfolio do up it. allocate gains you you there think to you've got gains that Okay, the strategy? look

Brian Harris

support reasonably we're First I able think or at of underneath of sheet And it feel two-year the to because you look because dividend want at into able between rush. the our to rotate don't around don't and there's no that's you cover our one them this AAAs dividend, buy loans. and to and very all of nice estate, as a pressure being we if lever and actually benefits balance dividend loans real and capital, beam X% invest tension conduit if to

days they close them XX securities close whereas buy you take loans Wednesday. to And and on

worth be out into think instruments. as strategy, you rally. billion a because investment into that not two-year these big point looking much I went as we're maturity. to So sell are might we're I of about On an $X.X would market putting just bond securities it the I them buy don't to we did happy billion and question, your to think as mean, immediately them hold $X.X up might

raise think think don't you in that points Because they for it things. these the It to yield to X% something or durable point than lot it really XX% tightening in are And of will and a us there has see that from six carry make an will to each, they investment. we're by is tighten points. I capital basis fine up XX want income prevents are And a But producing think tightening, are looks deploy while a And but to to like that we two-year, that. cash realistically on years what gains elsewhere. a up under and a it's I dividend. if is, it X% spreads immediately also two having order higher sustainable we'll flow this and are on I those support

Tim Hayes

the loan any more And or bridge the of January capital impact volatility Understood. portfolio? was it origination around a your securities this your portfolio conscious residual effort the Was there more shrank reflection the of quarter. given comments allocating pipeline just that from impacted towards

Brian Harris

strong, As more we loans good are payoffs see that of want pipeline our our Pamela you point we -- to received than But very mentioned that plenty and to loans make is opportunities originations. that out I to while acceptable.

in side. pass -- the to security giving securities. what to off are, really we principal marketplace because XXX where liquidity X% be being order next the considering than when that an XXX, generating returns to spread we're think see XXX, AAA lands what that's test LIBOR of has -- to risk-return And -- plus in well XX% which at two-year the that the at are ratio you bid is are we a don't they a at up as better on AAA in as superior at they it risk, But see see Ladder, generate when LIBOR given ROE you're loans we

and go We're they tighten them, at reason did the them. to we're loans long trading see continue they'll -- as loan they that spreads, as wide pipeline on those we up and but to think immediately don't if for sold would you'd happy into happy make lending we bridge some pick also do in stay side. We

been decision say we make understand, So events us long invest and our special a choice it I as risk on X% always in the XX-year as in I low I mantra it looked XX to into think our over ROE securities part XX% you kick at a to think business and a -- the was up for conduit to XX.X%. make adjusted do return want is teens. of rate period, years, try a the we our yields That's to I when to

see So it's and that's so tried-and-true consistent performance changing us a a it. pretty don't model I

Tim Hayes

Right.

especially been the… you've Now that over clear with pretty

Pamela McCormack

It's to we said, wanted bridge Brian thing. seeing have one very we Pamela. coming fairly up. add pipeline and robust I a everything we this some just are Notwithstanding quarter attractive do, opportunities for loan do

Tim Hayes

of and and your and queue. the Okay, I'll then me there. balance for mentioned one just this, active on some peers CLO you got know I you And was clear robust options. the don't hop missed actions And been it. of I But been if you Hear that I forgive loud And the right take but there. some me believe issuance of of one have back sheet. has more pretty might the in side the

year, you back buyer wondering AAA of potential of see a in know then half and as just So paper. financing CLO the of been if that you've a source I the

Just might a pick rate you up bit little and weigh competition returns. to wondering with maybe expect on if more that this cut there

Brian Harris

not all a a of realize market, to first sale is is financing it vehicle; it it the CLO is vehicle. important Well,

vehicles from LIBOR are we inside XXX sold as AAA XXX, to CLOs us it's that different conduit I So at the a well very regard at as have in CLO that. that are numerous of business. issuing can't long financing rates imagine And plus because being those

investment. the at just in why lever of attractive the underneath wide things. that's CLO safest when AAA banks its And on CLOs has way the something that. with I financial out it's plus you be side XX% the you the haven't And of And at if to it look name they because subordination there. it, don't But the reason think really see changed to a these crisis XXX, of stays think and instruments you it the from from else, and I to participating happen it very collateral nature CLO can the LIBOR one cross-collateralized call

us don't XXXX. well financing I them couple And see we of the of repo with on CLO vehicles I CLO our financing that a do was at you unsecured did became market, corporate. a the but And par entering under end as as regular know when as think

Bank inexpensive a So financing. that's been source very also Loan we've also of had and the Federal Home

we'll to can see, where probably have So, the Bank of that financing have and but leverage it get a securities. not at different Loan the the terribly I to you And now come even repoing really from right banks banks if AAA can tell felt Home more is lot down inside rates banks are you up now now. you the

So earnings I no. don't at see it dampening all our

Tim Hayes

the Okay. Thanks for comments.

Brian Harris

Sure.

Operator

of And our line next James. Please your proceed Stephen with Thank the question. comes question Raymond Laws with you. from

Stephen Laws

legislation portfolio? of portfolio of off Hi. couple City there and the do Can York because the have New I in around prepared touch the Another on a assets lowered been any up is two that exposure appreciate risk questions Pam Good other assets mortgage couple the you guess hit couple Ladder a the on remarks. portfolio? and of rent the any that. ratings But maybe in have afternoon. of controls I provided update on to exposure in first you in have on you your REITs

Pamela McCormack

We do.

have We limited exposure.

very equity significant totaled City have of assets. LTV origination, $XXX cushion. have loans on New a multi-family That million. average a so have loans weighted York four XX% they Those We from

and the performing impairments. of are expect any we not loans do All

Stephen Laws

that update is LTV appreciate certainly…. as I Great.

Brian Harris

our Stephen and largest has is very in also would it loan million affected. to that that add about exposure being little what is I portfolio $XXX

Stephen Laws

a far, through I so want on color Brian comments the kind ways And different that. for of Thanks on Fantastic. but few you've follow-up. your to this hit

ratio of peers to lot payout yield. seems in a have guys trade XX%. below little sector You The A are mid-XXs. the a on

a basis course, your the you be yield if would ratio XXX higher points Of payout sector. about than similar guys adopted

you -- capital does of back the a capital your eight how handle trade-off cost in to the assuming capital? an which consider a give-and-take curious think payout growth do of yield thinks bit little the payout investments Board ratio of How about used other could at the lower of invest just versus cost higher opportunities? to value a you portfolio, a and between if ratio, especially increase when having sizable into versus the recycle how be moved So, the lower book CMBS that to Board the about

Brian Harris

employees same Well, and the about that way. it for all think I think the matter the boardroom

long believe we're as our and returning XX%, investing excess generating that. returning what either to in it a As would the rather buybacks I like than we or of is us ROEs investors by mean through cash share dividend keep it

is very name. think our about them REITs bunch to We competitive next very -- set if you it parent really a and a big have of a mortgage that that's well-known

from. sometimes familiarity believe easier So we own, of emanate still names are common because those to that they the with the household that names

to is, us. way something it we the is sacred the dividend at But look

As of the people individually work $XXX million here. worth that stock own over you we know, in

concerned internally so are over-promising very we're things. managed, under-delivering about We and

So ROE tell X% the dividend, you X%, to it's relative a are we at little of competitors. with to most our our an surprised considering truth,

never to at look little a market at trading should stock say, P/E? I like mind XX and be a competitors we the And relative again, feels and undervalued. And we're us it

I a think there's value good here. proposition

to our through pay subsidiary, taxable earnings, we sure subsidiary. taxes a also, make retained a REIT We liabilities and with we do -- this tax our that that we're to have a of obviously manage has fact in the lot to REIT

happy to we're our raise dividend. And

possibly, today so. anyone our get the absolutely I about we're dividend want Oh, we dividend move the comfortable. that up. wouldn't years more else last or the make don't we five catcalls more I than to to than stock think, we And it few raised over that sure raised But a they're we've just raising price think if

I over capital. of I horizon, banging securities. were been loaded shareholder couple we we the environment, we look some think and into down thought why we we over rates of out look and retain up But next clearly years, it falling next to earnings think when we falling she builds We then look for there's have so you, that's telling it; if raise couple rate value, drum we've ways the think book if the come enough out I deliver at steady years to as can rates also we the But a will other value. goes. be into that going

to pushing we're environment. not dividend antsy in start rate a falling a So

Stephen Laws

of the my appreciate around Thanks for comments I that. a lot Great. question. taking

Operator

Thank you. line the Our from question. KBW. next proceed Rahmani Instructions] with comes of Please your with [Operator question Jade

Jade Rahmani

agree a and dividend manner I very much. the ratio. And conservative maintaining Thanks the with way a lower-than-peer in record for the payout you've approached

ask wanted CLOs. investments opportunistic about Just well as to as

One believe, your colleague, of CLOs your Tier-TX actually, some [ph], this peers former acquired quarter. they I

I should that was CLOs activity are there if the anticipate portfolio would from fact, bulk look acquisitions? were And be on themselves you strategy. any or strategy, and acquired REITs in of in security to trying that to secondly, as portfolios reposition if, if And wondering your came part some a undertake different you've fact we that market making at of mortgage

Brian Harris

something didn't so to itself. would don't Jade. We thank mean think a entertain for it corporate entertain a portfolio you they say. But acquisition We if Look, we it's to haven't, compliment. lot the always you But a just would heard presented there unpack that there, that acquisition. also,

competitors You keep plus lending securities, are at that look originator really, XXX, too, I why cases. in We're plus other a some what AA practices should in acquiring buy can -- security I and that XXX, or order. how they're CLOs. loan our LIBOR know an say, at make sometimes LIBOR and don't able to I'll when note as governor I Because AAA we're buying would and that if at doing,

frankly intensity you are we've way look as and $X basis, levered But time And the billion oftentimes of them do We acquisitions acquired things, basis. them very when think short you we viewed about of time. not a episodic these the the the in a CLO not special. period acquire at very if a oftentimes acquire daily at on

of after were When crisis. doors, one we financial opened largest TALF front the the the we under borrowers

of solely. So, company securities as management investment securities we a management ourselves don't view or

CLOs. you downright we when out to the the it's business because general lending our originators in a risks securities securities the see we market the It's returns think in do most think because But to to CLO generate where We those being ultimately lot happen the can acquiring we not like us us. they're of they in relative because better today, to people cheap just sell than expertise of topic. handed

it's say to us would I So, almost all we relative value do. everything

securities. LIBOR And XXX financeability I so can to at have we'd at XXX or will I and in XXX over don't LIBOR. have, acquire LIBOR happen if of plus think we loans continue we acceptable that which excess are written plus AAAs as being long stay acquiring they would imagine we as XXX,

major hard because If it's that you at think about principal the through of amount a competitors, our of they're debt. value one of leverage imagine cross-collateralized the get could pool little a XX% of XX% from security loans on they in to

You also there equity also. borrowers the have from in the imputed

pretty over are Many securities many us of these to buying alternate and we'll at to low these the loans of lot In look at our scenario, they're a So, financed costs we competitors. being the look model. -- we that the relatively don't loans by of attractive and at ratings. loans;

So, us I I would would conditions, expect imagine securities. continue current acquiring given to

think and of you'll hotter is end start those. but BBBs I investors don't the some maybe, see we We own own these acquiring AAs. the securities what AAAs

Jade Rahmani

very much. Thanks

of amount that repaid of estimating in give Turning to I -- the of million correctly. if $XXX north the loan the loans quarter? was I'm it it repayments, number think can you

Marc Fox

million. $XXX.X Yes,

Jade Rahmani

that specific Was there was other the that factor was uptick or perhaps by outsized uptick? driving were situations something the -- driven meaningful some else driven

Brian Harris

that's even always than if makeup of component where you we It's those. remember meaningful we we situation. a had an the I That $XXX usual. million. $XXX We million don't Yes, quarter had to one bigger imagine But think know $XXX million. don't was uptick. outsized

As as really move doesn't worry million off $XXX about average it. not that far million in $XXX payoffs that's so we -- far that to

Jade Rahmani

borrowers? are follow-up work And the rent And how they Are they properties? thinking kind Okay. amount transcript about especially I've a It's the to just an New just it. have on in York the control the issue on you of wait-and-see a decent it's done of so in mode, spoken it?

How are have wait trying you the market? to know doesn't outsized their exposure, properties, they operating the and are transactions business to expenses mentioned the other in loan some they but reduce see just much I approaching case?

Brian Harris

happy. But long lot poured don't ours. them We their period doing business any to plan being into and a I they're about here basically worse of over definitive time not that business to them. -- are you'll see obviously the lot formulated go them haven't of But there because money housing how we've think a a spoken affected not be a of had stock have believe in that's get to Most these won't as it. that

a of I buildings have also apartment affected so just - here an there's still that going that. are lot a I really But it. that view be don't on And there. by opinion have I to no that don't We and idea. own think there's I'm litigation and speculating

there's not can enough happy. you to, more of than they're I So them talk think but

Jade Rahmani

that. Okay, the Appreciate thanks color. for

Operator

with of Thank Please question next JPMorgan. Rick our you. from your And question. line comes Shane with the proceed

Rick Shane

afternoon. taking this in to bit just guys. it what of for point? more negotiations on Is talk going a things, want borrower deal Hey LIBOR becoming floors contentious Thanks a terms Two my there. is about questions little

or the of greater haven't question competition competition geographic the of dispersion level then the markets second you your in more frankly seeing and versus And some are peers, of given that disparity your many past? the you in is,

Brian Harris

in the markets? Competition lending

Rick Shane

Are markets? terms pickup those we of with a seeing of your seeing a broader peers. if dispersed like in some at lot lent you -- that -- more math it's competition guys you everything seeing than Are historically look we're Yes. in have you most a and of lot the your

Brian Harris

I competition. has think a there of been lot

that of was some the business I and think weren't the lenders. new capital of funds that there out people wave got hedge fairly some of the into of a normally alternative

XXX And dramatic. XX-month was I lending time came which period started think you saw I it. a the over of last pretty side year, around if the think in Because really on of mostly that about spreads quarter third

cities. pick cities so the that the about are big bigger lenders make And because banks have I well lot many -- terribly like competitive the country, -- a because the of loans in The I because you those that private in very think top contested MSAs sometimes not as lenders. across they're in but to secondary markets are hotly there space country, think as are smaller when the don't

underwriting not a We're there's get all terribly understand that concerned that goes that a it if about to another that. because that take in into a risk lose we while you one. It will But tenant mix. the isn't don't

York suddenly here New have because difficult. New in which as going are for so the think decades. hit York got been now, of they few the City private dominated into And I apartments were stock to fall world purview viewed And their prices completely lending by a banks

So that I think control loosen view the quarters kind things and opportunity and I basis, that the fourth third that now. the are a seasonal up quarter apartments sensing have in be that as to a always to most on and try out. to and in second way is competitive of think generally an we going competition for less there's figure rent we nationwide components But

doesn't not That heat. are getting nearly as mean much there's but things non-competitive,

this. Was brokers do the where have telling we'll answer? that We us, here's

Rick Shane

on question, is then Yes. the borrowers? a point how floor for important LIBOR certainly becoming deal back that And just

Brian Harris

can is to will degree to about. won't that we something share the which have concerned And and go. we're depending plan where they something talk negotiate. own It LIBOR the difficulty I they're They as happy about on here our and of that view transitional it be get presenting that

so one of And is a LIBOR a one. even not pricing us major decision. -- component a floor It's to

would point becoming more a on that is going for though what's oftentimes XX last important you a and moves if because be particularly LIBOR say think there's discussion So rates typically there's it a little so. and Fed to or out tricky, about is months are going around would the this that it about I view down. gone I

they is attractive loan; -- borrowers where offer fixed-rate a we And also today. we worth a about I short-term we think say they way to about loan. don't don't X-year to or have them those their And a worry million of it's if monthly sheet LIBOR that have a know balance we have a very And on give product to $XXX they payment is. buy capabilities; X-year loan floor just what the that our bridge simply,

going were think We very going going up. when we when going mostly balance those didn't LIBOR cycle up. did landed up on LIBOR rates expensive, And were in going the keep where our last rates keep not prior to year sheet caps believe was were to

the more. invited LIBOR points and them spread loan to So a XX take we whatever was which basis plus maybe just was fixed-rate at

way it while loan. up the holding I'm LIBOR well went that's and this one And assuming was, understand that's looked they at time something I

and us think was tried held So sell it year attractive some we or writing in securitize our We've it never a that maturities version I sheet. loans of very now. X product see and it. on to a fixed-rate X you'll balance probably And more

Rick Shane

you, Thank helpful. Brian. That’s

Operator

call Thank are at turn to I'd back remarks. like in questions time other there that the any you. the Seeing no queue closing floor over this to for the

Pamela McCormack

share again to forward happy earnings wanted to and today in to very joining speaking for you future. just all look say I our to you thank us and the

Brian Harris

Bye-bye. all. Thanks

Operator

This teleconference. you, today's Thank concludes everyone.

participation. at you and your You thank time all may we disconnect lines your for this

Ladder Capital (LADR) 31 Jul 192019 Q2 Earnings call transcript