LADR - Earnings call transcript Q4 2019

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Operator

Good afternoon, and welcome to the Ladder Capital Corp’s Earnings Call for the Fourth Quarter of 2019. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions]

At this time, I would like to turn the conference call over to Ladder's, Chief Compliance Officer and Senior Regulatory Counsel, Ms. Wallach. Michelle Ms. ahead go Please Wallach.

Michelle Wallach

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

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

measures to for call this call these this statements. undertake differ measures of some of non-GAAP implied our you results. release. with in Before our Reconciliation the call. XX-K do prepared and the measures GAAP We’ll everyone like results may to most I from we include also accordance I’d on those the recent remind may a update statements. comparable non-GAAP most earnings these to in certain that expressed duty financial or may of refer contained our risks to description Actual call, affect materially to on that Form refer GAAP begins, this any are forward-looking not

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

Pamela McCormack

Michelle, and you, afternoon, everyone. Thank good

equity an or core after-tax $XX.X reflecting $X.XX share, quarter, of fourth produced Ladder million the of XX.X%. During core return on per earnings

$X.XX $X.XX covering core return produced cash year of core full delivering $XXX.X on an our million XXXX, tax per or share earnings equity. after and dividend For annual XX.X% Ladder share, per the

environment focused identifying strengthening investment structure. lending and In opportunities in competitive XXXX, we attractive further liability a on our

take the pivot best returns advantage well as risk-adjusted us be to as model in of Our to flexibility the the afford to opportunities market. multi-cylinder continues identify to ability quickly the with business attractive and patient

originated the In loans fourth million of and $XXX of million of which $XXX balance quarter, securities. loans, sheet we we were acquired XX%

full the billion XX% which of securities. sheet loans of acquired balance were $X.X originated we loans, we billion and year of For XXXX, $X.X

and Brian we As with continue strengthen a diversified sheet cover structure maintaining of Mark right our to will maturities and side long-dated later, that by the staggered. are liability well balance

progress on grade. During to our XXXX, meaningful we made investment path

landmark corporate interest the a of from triggered revolving BB facility. prepared BaX family upgrade rate point also for $X.XX, of $XXX million a to a closed which complemented in a basis January and unsecured step rating The by XX credit on Plus, XXXX. coupon Fitch bond unsecured down As our field our to Moody's offering we issuance corporate that was at in seven-year corporate issuance

loan purchase quarter, Furthermore, since term an the funding extended our corporate on revolving million facilities. facility. enjoy the end of years dates of facilities the on average our and four maturity we $XXX of third secured now over remaining credit our We secured all

of we leading We leverage moderate and commitment Ladder a continue investment-grade partners, bank strong goal Through approach to and founding. our relationship an maintain disciplined efforts achieving continued to with several progress back a to our our with making coupled long-standing such investing, meaningful towards rating. to are

of more of loans. which $XX securitization contributed our conduit the detail, million private in begin million sale and of million products QX of to business, our discuss earnings conduit loans I'll a $XX I As from with $XXX

billion For XXXX, sale the business $XX the contributed conduit earnings $X of full million our year core from solid loans. of

million closed million million of in $XX core million sales. additional of generated we private through quarter of into securitization XXXX, sold transactions first $X.X our an For $XXX gains. and Both $XXX loans, February the and

securitization do rental expect realized and from participate to our The quarter. conduit further sale loans gain loan the securitizations income. or continues not our margin on net during sale net interest in We business to any of complement recurring

our $XXX LIBOR all Turning $XX million We rate balance business. sheet loan loans quarter size fourth an of weighted were during XXX loan which the balance a average points of basis originated of XX%. sheet average weighted with average of origination almost a million, LTV floating of to over spread and

a loan $XXX of resulting in quarter originations. basis spread million points comprised XXX we over $XX.X rate floating of with received a million net payoffs, balance the During primarily, sheet weighted of loans LIBOR average of

$X.X size of originated LTV of XXXX, balance average weighted an LIBOR we million, average a rate sheet floating For over XXX loans of full points with the weighted basis $XX billion of XX%. and predominantly loan year a average spread

During properties At lease undepreciated portfolio basis of earnings. recurring primarily tenants. XXXX, from continued to an comprised consistent investments income $X.X rental that we our net provide quarter-end, contribute estate to net equity flows estate cash billion of long-dated real on to our credit real had

fourth quarter, our the condominium we Las Veer in unit last the During remaining sale Vegas. completed towers of at

in generated by a to-date. $XXX XX.X% $XX net a Veer Towers of resulted IRR million and investment profit Our million and

value look we in investments in XXXX, the real ahead equity will we and contemplate harvesting continue our the As of portfolio. manage to estate embedded

acquired fourth acquisitions and XXXX $X.X million In for quarter highly our the totaled securities our $XXX of billion. Securities year the segment full during rated we

quarter our at securities As billion December end portfolio fourth the XXXX the totaled XX, $X.X billion up of $X.X XXXX. of of from

steady end the investment and and characterized we year pleased earnings were summary, In by strong activity. loan origination to

also capital are a start with to We the best-in-class New as Year pleased BB+ company structure. a

Officer. over Financial now to Chief turn I'll With the Marc call Fox, our that,

Marc Fox

Thank you, Pamela.

net dividends and complemented quarter, on sales our $XX.X payout loans a closely. results share totaled fourth income million XX%. and the rental estate ratio income distributions net of resulting was $X.X gains more $X.X of million of income $XX.X of sales. in equivalent million of recurring interest per and In million This sale at XXX.X gains shares From the the from million. to income financial paid core on of we $X.XX of million income, in of $XX gains this securities on forms core real Looking by

balance sheet. more reflecting It senior of XXXX capital the our debt closely asset secured, XX% focus continued assets XX% senior the base at XX, of Looking total noteworthy that plus our investments of December as of secured top cash investments is were Ladder's the comprised on at stack.

defaulted million Hotel provision credit income loan a of fourth the two land loan secured the Diego loss that by foreclosure was our we a During a in during $X.X on $XX.X quarter. a experienced by on million Angeles effect on million $X gain quarter, on both mezzanine which slightly million San positive We a a that offset net events $X.XX Los statement. recorded had

Turning our capital structure. to

our and the prior pricing that leverage basis a Bond the to X we to continue points credit diversify was have We corporate credit issuances. funding basis by the previous investors strengthen spread times points to lower progress made was base. ratio pursuit Ladder X of remains our issuance. range reflected Ladder the bond in The of in our recent recognize as times investment-grade and the issuance evidenced than X.XX% ratings. than rate to and committed target of coupon the tightest XXX rate tighter XX

a than our XX The basis and less strength, bond sheet proceeds approximately of sound secured long-term in pay flexibility We side with we of financing. to used certainty, comes to long-term view funding. corporate investment cost bond the right cost the committed points down the the debt unsecured balance as increased that

a We closed year times. X.XX with the of debt-to-equity ratio

ratio Excluding be our of securities liquid debt-to-equity highly our X.XX would portfolio and times. rated highly

assets was $XX.XX. XX/XX/XXXX of as substantially our share bond billion, per unsecured corporate times to $X.X included over at stood Unencumbered X.X X.XX:X value unencumbered book a the indentures. Undepreciated requirement at ratio year-end debt assets in reflecting

mortgage securities and our comprised real unencumbered backed by of current potential base source the assets first of majority represent the estate, loans, loans first asset Since funding. of future a excess is unencumbered mortgage

$X.X over As of $XXX of February and fund available assets over unencumbered liquidity million XXth, billion investments. of we new to had

accounting balance of recorded front, the XXXX credit approximately financial We of points impact has current estimate be the $XX statements. reserve unimpaired sheet million loan of be the and initial on or to On XX our in that consolidated the portfolio. reporting to loss Ladder basis expected first quarter our CECL calculated

risk the future as macro well the projected current and CECL our conditions. factors and of market loan reserve as include portfolio Important size, composition, driving profile

expect vary the reflecting changes CECL the portfolio. our from of to quarter-to-quarter reserve composition We in size and

turn I'll over our that, Officer, with you now Executive Harris. to And Brian Chief

Brian Harris

especially turned we're Mark. Thanks the XXXX Ladder after-tax in a for performance proud year. of strong of XX.X% ROE in and our

offered been lending both build balance relatively enjoyed floating our a XXXX, conduit flat and relatively our credit keeping increase CLO sheet which we from securities we rate continue securities a also year-over-year, During as our AAA contribution wide programs in we revenue while a portfolio spreads. activity have XX% healthy to inventory in maintained at

value have our favoring our strategies preference expressed the liquidity products for all apartments quarters, few across last relative like Over short-dated property we in and types warehouses. investment investments a and maintaining

We on preference AAA business. securities balance over in forcing also volume expressed loans marginal for the sheet loan our

continue XXXX. we into go same as We that theme further to expect

Given to real expect our current volatile owning securities, market focus acquisition lending our program, high-quality on in continue rated of we conditions, estate. investments to and conduit highly

balance be this do its sheet albeit, will to at we current maintaining or size, will our loan selective. while We portfolio very near continue

face We competition. it from fallen intend about strong even remain strong and X.X% going today of in XXXX will which spreads the with the to by exacerbated of this has is tighter environment likelihood, beginning X.XX% LIBOR lower. a prudent to at be credit

real to XXXX, and we inventory offset by our mature on to margin are for be net estate of harvesting ready securities. lower sale trend likely is now gains assets that While somewhat in this interest expect increased

as credit unsecured at rates market $XXX began, the in of year rate bond X.XX%. As of million bonds successfully issuing seven-year we January new and the a fell, corporate accessed spreads

liability feel to long caused to this our benefits we've an game of increased unsecured This the as in overall complements for our our because we increase you expense Ladder a longer and always use leverage in this far told interest of term construct investment-grade cost our is the that increase debt. us suits the as use company. effort it modest outweigh While become conservative trying before

our year. unsecured into We expect as use later continue we debt the to of get

of X.XXXX% that that obligation we have with at lower-cost refinance lowering cost at in And hope overall our that issued previously outstanding time. interest We to rate August. is par bond debt funds new pre-payable

seems of point. lots recent quite invest this have while. opportunistically in fortuitous lower that market a and bond than expect we volatility seen our are have to at take issuance volatility of at of timing With we liquidity to in picking offered assets The up, to being be prices advantage

at their conclude very a the was end catching I'll successful all our Ladder you up shareholders can some thank to now our with for questions. and And support I in April. at XXXX. of of employees forward take what we of by efforts to all bondholders saying you again our of look

Operator

At be Hayes, time, this from [Operator will Instructions] B. question your with FBR. we question-and-answer proceed session. Riley Tim Our question. conducting Please is first a

Tim Hayes

evening or was buyer assets know if multiple good a than it? on asset likely for estate. my these more assets sound was diversified wondering seller can just My Thanks the guys. of like but you I to CRE you're or quarter? quarter was about acquisition made don't this ,So of so it what Hey, touch first attractive questions. this deal of real Last what million $XX be just deals? a taking type you one or it one

Marc Fox

Yes.

that So, I'll up. pick

the was we've $XX.X had you're money. worth real we what seeing is foreclosed in Dollar in invested few also real increase million. on which we increase million So, the estate the and properties $XX.X seeing has stores you're estate portfolio we mentioned been And the housing and a The portfolio acquisitions worth quarter. had the is then of General where during place student hotel a two the

Pamela McCormack

first hotel it mezzanine of clarify And loan we into. that just a there in was stepped thing to $X.X one was the that front million

you that's how on basis get the So, that. to higher

Marc Fox

That's correct.

Tim Hayes

work that impact? you that. just coronavirus to I some Okay, got know a But put wondering that Or hotel likely think any opportunity you being that of most to have to what you you actually it. the type more might guys it being Do an Omaha impacted? have the that's for at capital we know see potentially the capital where for is Thanks there obviously volatility? of or exposure. kind And impact all clarifying biggest markets see And have. or catalyst you retail you accretively? be do don't impact

Brian Harris

can generally But I an I from always at a end it's in floor, we in Yes, it is But on on of is trading the the yes, day. I of interesting certainly, is what I see I especially fall -- the hear at really causing end yes, the hear to is it which prices take can mean building, kind remember the perspective comes I But this a day when what a lot can there's the ultimately train. different -- it U.S. in package fear. the rapidly. of it hear today. perspective energy

that a And there's certainly large prices businesses. less positive And companies But of there result a virus. actually by energy don't as when be do sense are in certainly it's I travel I going think most fall. to for well the

in gas So, drive all I the lower prices, home what United States in see likelihood staying and is of to people at market.

but as possible. it's it, lot don't I I of as far know about about I would I out -- a if a it country what chatter little I keeping walls that coronavirus, got the as think around like say see think of

very be as I out think be ultimately, it I to turn we think today. with as it And likely nearly not dealing will it's coronavirus. will seems the scary

complacent you've course, But us kind But, do apartments, see caution – presents and today. believe to we a really few because of last tell. kinds was Absolutely very belief moving will any if bit the that's the over to world do heard signaling opportunities of hotel of that I those markets. seeing the -- we've quarters, volatility, our think we that have volatility time that from desire little extreme we're in we volatility well more been and

and million we it deploying plenty dry $XXX a today. were have Having of weeks just powder we ago, raised few

so would on would capital another want think or see we volatility we anybody, like very if could today wish I well. week And to bad anything but for never so Ladder do

Tim Hayes

foreclosure for helpful. then color And resolution XM and That's and do can Appreciate any give filed you the Brian. year this an the installed headquarter bankruptcy you confident the how you investor is saw interest? Got recover earlier What the that you basis can and potential process. I the there loan? update us of are think accrued your it. timing on

Brian Harris

The an located feet has and it's Texas. acres assets another already think land of development a properties. in with anything he's got asset largest It And has legal wrong yet. the because one The it. with a loan I is default, rights many problem. in because is in owns I the on again, reason, real it's interesting estate. until he square legal don't one think because And Well, associated XXX Austin, the clarified, phenomenon of situation there's his unique of entities case, which bankruptcy sponsor been several gets the has is million not

in I tell faster. are a price the loan foot. as is that. Texas a about at on can our move through And I little land Austin, things near does Texas area higher Texas million But a $XX $XX exposure and think in of traveling than bit that is We square at

we're So confident. very

rate at almost loan of say The accruing XX%. However, is default a I'd timing currently also matters.

avoid difficult accruing, when don't on all And a accruing years, foreclosure, pretty pay if he collect will as if wants he be and able big often it, wants to, think us he to that a at Financials. I after say few when But got and We've comes so status. we Ladder to recapitalize but I pay it that should to we be but can that interest. non-accrual windfall Capital's – mean it to become

Tim Hayes

Got it.

going gain the to remaining have see gain sale and volumes the helpful. that then was year? originations part it queue. and think But the absent. over quarter on I'll I Okay. guess, to you're more this a this couple sales are hop little pretty very just That's though committed It just quarter be and for Conduit sale obviously even the of back be high at like trending strong. very I of might And seems wondering in forward come how should on you one strong. still even quarters pretty bit past seems me business though back levels

just that? So around for color some looking

Brian Harris

certainly last been does have it's that they reason, rates interest very When well so interest accompanied rates wrong kind falling the falling like of usually in spreads. credit because and interest business that's are Yeah widening been rates the are or when week falling. by have

tonight, only for sale closed, in and of securitization. believe $XX I As loans have in million we

more close low is And exposure. we will some and think those attractive And so that very as loans, more floors. most we of closing into be

So yes, that are in very we interested in staying business.

And margins seems acceptable. the economy the properties backdrop okay The are The performing too. well. are in

do to that are I rates much for last think that low high. conduit quite as – to very just not so think despite so been long year. possible I I going I similar have low like and would say we fact The rates a So it's – volume as but interest year the interest is to will be –

Tim Hayes

Thanks questions. Okay. again That's helpful. for All my taking right.

Brian Harris

You’re welcome.

Operator

Our KBW. question. your next question Please is Rahmani, from Jade proceed with

Jade Rahmani

Did much. that. you have an very been quarter? catch securitizations really of far thus didn't CMBS this I Thanks update give what

Pamela McCormack

this Pamela. Or Jade, are you mean XQ? XQ? Do going you Hi. for is

Jade Rahmani

Yeah XQ.

Pamela McCormack

did so were We and a We then the participated in did. can we completed and total talk million The actually couple we separately at – so that this first today, we loans settled for of $XXX.X we first Wells we X%. Fargo a sold the for think this around about the will quarter it. I is quarter, it be do deal did volume

Jade Rahmani

And securities quarter? for in any Thanks in amount can the quantify Okay. you place sales took there of fourth quarter? the purchases that. Were that

Marc Fox

want CMBS clear? securitization Or Mark, securities? want you to do you Or be have that? you to just

Jade Rahmani

CMBS securities.

Marc Fox

CMBS securities.

we because million of had had amount we And million amortization purchased of course went The We securities. we prepayments. over quarter, the worth amortization. $XXX.X quarter, a $XXX fourth and another sold during down of of $XXX the the balance During million. fair

Jade Rahmani

Okay.

Brian Harris

seen adding been that we've couple in can of last here, imagine with weeks to as And the the you our inventory. we've volatility

Jade Rahmani

Can is New company's Okay. pretty be some area pickup scary to stories York exposure and overall talk one where the Also, you're exposure? year? in how might hotel And I've that? there a hearing hotel any about you about been hotel that the notable anticipate York New foreclosures feeling this you market?

Pamela McCormack

we have $XXX owned. the So by then we $XX million million total, million in of broken hotels and $XXX of loans have about down

As of of average we first all, LTV Brian earlier, XX%. alluded have an to

that we our a market, have equity most are on we them, have but don't of anything XX% So of so to drive out are good us. them quotation to hotels stands

have to us anything don't hotels at problematic no out is have that York New and stands we We all.

Brian Harris

would And we we've were have -- been York Airbnb, New Hotel that. concerned a what I say, well, market before the always about little a TJ, about a coronavirus. happened than with little more little concerned We

So some getting -- have in and little truth, but then you couple heard here market. a assets a think I I to about the but of we're more tell stories that there, interested

I'm which said, have And Pamela But shock by so now, exposure. any as comfortable with pretty we're we to that. going don't our -- right and

We In much I it have taken it know ago. XX%. loan down portfolio, much, that quite was higher And it's years few a our a than bit. only

Jade Rahmani

spreads, on $XX fixed potential credit you current any environment assuming just mentioned either what's in markets this volatile through that million In in and the Do I'm anticipate overall conduit strategies? might CMBS pipeline, but income business, or transpire you the hedge only Okay. your equity losses widening going the effects. spillover on mark-to-market

Brian Harris

been do of in of loans. AAA floating million yes, the of We space the there know, XXX. at an you feel are while the optical a that the rate little big that's mean, XX-year too. we as That's place $XX odd is bit conduit fans we've XXX, CLO with at the LIBOR be to I right in really. category. No, assets. have Those But

just -- very down a thing in we expecting conduit But -- if or we deals. I that bit calls be million many margin at only turn anything The we're and not high could don't done premiums. wish so that I But have. so would own any little again, the we've $XX conduit it

a them owned high enough of haven't into premium. We be hedged long too to

Marc Fox

Yeah.

Jade Rahmani

slowdown million the On $XXX million you on on the I'm basis? should three that's have wondering repayment the activity if loan -- that number range. portfolio we based the core in quarters a to Or last perhaps quarterly repayments volatility? $XXX in assume for a any expect for been

Pamela McCormack

But you safely over assume little about think lighter it moment. this or at I think looks the can a in that at right. I candidly long-term range that look

Marc Fox

Yeah.

last million. three is The and $XXX quarters $XXX right. between You're million

Brian Harris

depends are that other of also. lenders lot what doing A on

itself So I'd the off few here. take business might imagine a weeks

prepayments. things be it So delayed. say, could I’d certainly any accelerate won't

Jade Rahmani

Thanks for Okay. the questions. taking

Brian Harris

Okay.

Operator

Partners. question next from with LTC proceed is Dryer, Our question. your Joel Please

Joel Dryer

Thank on Los you a everybody. wonder afternoon loss give you. on land. provision the the Good more loan Angeles little could I color if just

Brian Harris

it's provision, of Okay. get the located I'll loan Well, that between but strip. give actually let best going to me and located to you was just in you tell a West I'll areas too it's Angeles, is a -- the Los Marc Hollywood this one land of developer, Sunset

of call in zoning when did he it's times New and not we and been what three So did would it the two But going two loan land it that up funny had get And you City. previously not us get think upzoning get a probably times land we loan like a we to for was three. thought who York to he a the upselling. got of the would middle times came the he developer any in loan, it's event,

had what But million ultimately is... trouble. provision the the equity goes in as our contributed as Sponsor asset. that's market into the as put $XX prior to what taking So loan far

Marc Fox

million. $X

Brian Harris

million. $X

the big was balance. how loan so And

Pamela McCormack

million Along of with land. $XX.X about quarters three on

Joel Dryer

Thanks, Pamela.

underwrote to So without that saying it obviously? it goes Xx you a

Brian Harris

And don't a or sell but we will there apartments in out bring partner JV to build. properly we either build Yes. it

Joel Dryer

of – assets such at prices color seen seeing part would And important at end which time. it's long business? that because And and lower you a then on helpful assets more a in just something we've Brian your little the be comments very book you're an was of your mentioned of

Brian Harris

well of the too was little in moved assets, with most to duration, joyous as felt want that. quite anticipation it going it just bit as short we out the bit we've didn't last see as are we But we whenever when higher-quality around well year. I say think little something lower as there I here that a again over possible and a for part assets really – cheaper if just get Yes, And prices. towards involved

would acquisitions. So been directed have securities towards most comment that of

a so they that's index, high-yield I anecdotal. ETF so that corporate invest an spreads, which $XX much The last many in is caused which a and year, about quick people the HYG just And bond and the the extraordinary took in think to amount what of billion market. people was surrogate pressure on high-yield

think the redemptions two I billion they've in days. $X had in last

the I So of looking the morning when to day came at that. the I in there on at out see this and did we desk the force informed selling start people end

acquiring. not anything. And selling in were so participating We're we

this will to so that prices all. if – it's And liquidity continue not oil question. more a problem that once that there's in problem happen And fall in does a problem It's while get credit a market at exacerbated. a

rates able that low acquire estate extent On extraordinary longer data finance at able also. XX and to that the the years other interest to opportunity creates hand it real we're X% like as as we're for an to things

rates said, Fed think – they LIBOR that's higher what it. floaters had LIBOR be XXXX moved in Fed and and me before I moving investing going raise I had started I if short-term interest to to in would LIBOR in anticipation of did. asked So the rates we're the you with

XX that's moved from top to probably not going last the going at And the with to months, our XXX down in of X.X% LIBOR priority list be forward. having

are, securities However, think a time people great being it's to also given we acquire a great acquire are liquidate. overall how that time it's interest forced real to low rates estate short-term to and other

Joel Dryer

helpful. very That's Okay.

So that ourselves. watch index. high-yield bond We watched SJB the you

So...

Brian Harris

mimic sold. do all Fund we get what, you tighten. can of lot have bonds things into And they outflows of to when I is When – ETFs a what kind lot watch Yes each there's flows But buy that bonds flows. other. of have to you a expect flows. we

Joel Dryer

Excellent. you. the Thank answers. Appreciate

Brian Harris

Sure.

Operator

question Our your JPMorgan. Arestia, Please question. next proceed is Charlie from with

Charlie Arestia

broader directly today. if big what risk everybody. the purchased you if And talk the how on in there's wondering versus you Hey, I Rick Charlie This about the is bit conduit for any a could portfolio that in you in collateral business. mitigate differences originate you was there? CMBS

Brian Harris

Well, originating loans you you're through you collateral you're be always sell that it. the when buy may loans AAA we AAAs synthetically yes until securitization, and the I similar own and unrated underlies actually the mean, the we for securities, and – Whereas when almost originating buy AAs.

the be sold seconds, the by the them, usually be loan level three and securities, whole can in a security So, definition, they're weeks. the safer much inside than of whereas loans AAA XX subordination whole on cannot sold

Charlie Arestia

Okay.

Brian Harris

liquid, we about risk hedge, by assets That's of do we as we the me mitigate have way, and So that. shorter a more there? a always to not preference for asking how unique us, duration you a result coronavirus. Are

Charlie Arestia

helpful, the color on portfolio, to specific there's that Yes. the broader of is would anything but stack mean, be helpful. I kind capital definitely if the

Brian Harris

don't we Well, use us do credit unless asking we default I particular swaps it's a take you're if if think, hedges, no, name. credit

buy put Sometimes in portfolio. our options we'll

who we Joel, a like you went have credit that just he we that knows of lot here, generals, if happen we exposure we've own a it. that's before So, to to to dollar like and

there portfolio. But a But duration, $XX than in billion in risk the said longer mitigate million, to rate interest three little right a that's that. is, years now, are do mitigate we real But exposure I $X to as over earlier, ways only anything we hedge.

think rate small in my today exposure an ever I a handled. and than life in seen have We interest I've I've books that

Charlie Arestia

it. Got

I on give the you an lending I bit. switching remarks, heard a Okay. prepared update could in don't gears And floors then, think the but in little LIBOR portfolio?

Marc Fox

Sure.

LIBOR weighted in point we floor at time, in in was that that LIBOR them floors of it XX% was pardon time, was average our money. LIBOR at XXX. XXX. were that As The -- me, point of XXX And XX/XX had the

the So amount basis about it's of And -- were about that billion basis weighted they $X.X are we a billion worth a earning. $X.X on on XX be points of average floating worth rate would loans, loans.

$X talking you're about on year floor million per over basis. So income of that little a

Charlie Arestia

for And me. then question Okay, great. last

Some look Are have Or any in two last there particularly opportunities of compelling? the active quarters. your peers that are you been guys staying Europe mostly domestic? seeing over you

Brian Harris

We're XXX% domestic.

time. of UBS, us Europe, Suisse I'm could worked where of we Credit at estate see a lot experience have real in heads anything You or not compelling. in we were that seeing that the us most of But

if think into the Europe, to on we don't I be believe, would I side. However, were loan go it

be borrower. would it think a on I be equity the we would side, where

Charlie Arestia

questions. taking Thanks the Okay. for

Operator

next JMP question is Securities. with question. Chris Please from Instructions] proceed [Operator Our Muller, your

Chris Muller

Hey, Thanks guys. securities been of can there I from the book taking portfolio last the And the value quarter? quarter? then, positive fair is Thanks. guys question. further that them But, the first on in is the assume guess, it to you appreciation in estimate fourth is, Most have already. the here one asked there impact for

Marc Fox

Yes.

of terms fourth impact at securities In the quarter, the it substantial portfolio was in the on not all.

We The duration a one the duration recall thing always weighted portfolio. a that have is on have XX -- is short very average we to months.

see don't massive fluctuation of so, And amount a we there.

Brian Harris

rate. And most of it is floating

Marc Fox

to statement you the of rate, most call you'll comprehensive other you of the and And the it, portion income reconciliation can in able our, financial floating exact to exactly. equity statements be it's direct what We Yes. amount. see

Brian Harris

out, time. to use to I portfolio securities also our tend we remember during point special want if you

into and use the very part because we're we to our be -- X% it then funded, high, But X% a in because short process we center. most very loan origination or volatility of allow becomes profit to AAA way lever yield. or buy is we're able us a them patient So it the X% securities to for

while a sit there just book. in comes until we'll the loan something along for better So

certainly, although it So yes, we of don't price usually probably price in AAA appreciation, have on, what's for gone does rates, given up bit, a use little they're lot a a volatility. interest but two-year not

Chris Muller

helpful. Got you. it. Thank That’s

Brian Harris

Sure.

Operator

Jason Our with next question Please Point. proceed your question. Compass is from Weaver,

Jason Weaver

good Hi, evening.

in what speak seeing for this new First, in wonder in if quarter versus you're originations I can spreads you to XQ? XXX the loan

Brian Harris

spreads tell in you Pamela answer the that that handles this but you of he over think some be were as month cut nothing. ago answer -- year XX today week, but were And this is the closing loans I anyway answers, up XXX give just the -- you XXX, let I'll of I'll most until her right with that today because year XX Because beginning a those street of Pamela XXX. or XXX XX-year and XXX a not tell spreads I the mean would will it, typical will now. off over

a because we market are however, saw loans if exercised. been floors many again think we've have we're been and fallen throughout with seeing somewhat it I XXXX, And XXXX. rates max interest in that's phenomenon protected closing being

XX-year, let is I'll application the rate real but So with over what to pipeline lock it in Pamela describe rate that, something at XXX XXX if we the over. under is if closed, were anything have the we today

Pamela McCormack

he asked about to Are you looking you I think for me balance sheet loans. more... give

Jason Weaver

I Yes, loans was... what is sheet balance

Pamela McCormack

don't up there for little want Okay. we're a now. we -- for that think similarly average bit, about so have the would it And in because be to to it's I would but trended are optimistic weighted Right X.XX I say early we quarter. was say, too XQ and

Jason Weaver

And most floor point. seen this approval. floaters also of They're the the through that at come for I've in

Brian Harris

floor. but of rate mean of the it's ago plus was LIBOR I that was floating plus probably asked instrument, XXX loan a now couple a months LIBOR XXX So, because

Jason Weaver

Got you clarification was where a XX/XX, question, as just at XXX. for of it. previous on weighted average addressed the one And

feature figure, portfolio mentioned out $X.X that of You loans cores, your ones a billion $X.X existing the billion correct? are

Marc Fox

loan loans the is okay. were loans billion at all rate money, balance The about $X.X rate floating the sheet of billion floating in our No. portfolio, in $X.X

Brian Harris

the at now. They're floor

Marc Fox

they're the money XX points. Yes, basis in

So that's how to that. get you

Jason Weaver

the fixed you one the hedging comparatively there? more And senior unsecured. using floating given subject, almost on portfolio same rate Are the then versus Got overall it. rate

Brian Harris

No. We did -- did not I not.

Jason Weaver

it. Got

Okay. Well, thank you taking my questions. for

Brian Harris

hedge functions now. for We a is think is -- widening BB as I high-yield And mean that instance a right bonds. it so against

not outstanding it swap So January, we did very done fortunate and in it is have we're out. to but gotten early

Jason Weaver

thank taking right. Well, my you for All questions.

Operator

Executive I'll That Officer. concludes Harris, company's session. return Chief our call the the to question-and-answer now Brian

Brian Harris

Well, I'm of sure. long all a at for day the of end us

after So, us. bit listening a takes for thank you work always The here longer. audit and little hanging to around

later announcing little here. we So, a were bit

think back talk I for long. right. be won't first at too we again We'll quarter be to end about you the of So, right to done the April. All

So, thanks everybody.

Operator

conference. This concludes today's

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

Ladder Capital (LADR) 27 Feb 202019 Q4 Earnings call transcript