Ladder Capital (LADR) 29 Jul 222022 Q2 Earnings call transcript

Company Profile

Participants

Brian Harris	Founder & Chief Executive Officer
Pamela Mccormack	Founder & President
Steven Delaney	JMP Securities
Jade Rahmani	KBW
Ricardo Chinchilla	Deutsche Bank
Eric Hagen	BTIG
Matthew Howlett	B. Riley

Call transcript

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Operator

Good afternoon! And welcome to Ladder Capital Corp's Earnings Call for the Second Quarter of 2022.

As a reminder, today's call is being recorded. This afternoon Ladder released its financial results for the quarter ended June 30, 2022.

Before the call begins I'd like to call your attention to the customary Safe Harbor disclosure in our Earnings Release regarding forward-looking statements. Today's call may include forward-looking statements and projections, and we refer you to our most recent Form 10-K for important factors that could cause actual results to differ materially from these statements and projections. any required update by undertake or forward-looking not unless projections law. do obligation our to statements We

the In addition, to the Ladder this in with GAAP on financial which this isolation will The information discuss certain turn accordance which Ladder's performance. in I'd GAAP. Relations in figures is our a to presented are time, believes to non-GAAP Pamela These President, our is management information reconciled or not are the be of presentation as financial presentation, in relevant company's assessing supplemental intended available this company's to website. Investor call, section measures the McCormack. call At of financial over considered measures for to substitute like

Pamela McCormack

good and you everyone. evening Thank

earnings we quarter quarters XXXX Rising rates dividend our billion predominately million per structure. June, the $X strong component and our $XX.X generated share. growth, loan portfolio bonds distributable rate successive by our following rate to of $X.XX five For in our continue large to unsecured portfolio increased Ladder a share. or and of liability per In term $X.XX quarterly XX% given floating fixed earnings earnings to of of provide long tailwind second

second with multi-family totaling originations with properties. at As we sell quarter supplemented a repeat in the borrowers, million of second loans significant focused housing by book to those Paul newly in sheet to originations In our assets Ladder balance XX% more a constructed $XXX loans again the to will premium our of discuss on quarter were of XX million. $XXX real-estate our were detail, earnings manufactured multi-family than our More continuing sales, value. originated with including or XX% made loans, underappreciated quarter

quarter recent portfolio we a to focus loan loans at July an to our reducing of of retail be loan balance and than hotel and received, Our less the X% in significant payoffs the transitional early to concentration average loan balance and received our X% portfolio weighted ended our exposure multi-family built repayment comprised Due largest X%. of of $XX affects, with lightly million, and sheet respectively. the hotel primarily hotel our on Further, sheet loan-to-value newly continues middle-market loan XX%. we

to real-estate contribute Our was The portfolio financed portfolio non on lease by grade producing it’s and comprised term, net continues investment returns of to double earnings, meaningfully digit with consistently distributable with long debt. primarily an tenant mark-to-market properties equity.

the million. quarter balance $XXX Our a securities with of ended portfolio

attractive $XXX asset the and quality loan earnings rising been I'll are and dividend million. assets strong Paul. is front, over being ratio sheet balance XX% back of and credit, a with XX% With is solid, positioned readily adjusted revolving equity, in non-recourse, of volatile by comprised tightening market with of secured liability in stands we of and our and upsized earnings into we portfolio to positioning call Also the our rate the Approximately to the space. post-COVID low those of XX% our our non-mark to our we and comprised turn liquidity, half perspective of expanded, well assets, and billion which from environment. cash credit our our unsecured July, wind and a XX% are interest never bonds, our comprised at with second that of despite credit now Multi-Cylinder debt. On structure very with year, financeable and our market has model syndicate stronger. we working, opportunities successfully $X.X of of capital a assets as continue senior standards, head of non-bank credit X.Xx of loans. is pleased taking unencumbered the facility first are our cost In reduce the of grow at very conclusion, The in advantage mortgage With unencumbered our conditions leverage now business originations, book to

Paul Miceli

Pamela. Thank you,

in As quarter, generated second $XX.X or or share. earnings million per the discussed Ladder distributable $X.XX

Our continue segments the second quarter. to well during three perform

sheet Our $X and billion and is diverse rate, balance of loan primarily portfolio terms geography. collateral floating in

origination sheet a added as the million loans. During balance activity we second loan in of XXX quarter, pay-offs net outpaced

originated over by XX time is Therefore, our was from Pamela maturity origination. set complemented of the rise with which months fixed balance increases our bonds, floors As continues corporate This loan rates. XX% discussed, billion XXXX. last of rate, with sheet at to in approximately of our of of our is in the October portfolio the income unsecured structure, liability XX% in benefit X.X including nearest interest

also office a non-accrual included in of quarter reversal million the X.X of Second loan provision, recognized on successful a previously resolution Delaware.

lease Our real two-thirds properties, representing $X approximately includes net portfolio perform segment. of continues billion and estate the XXX well also to

tenants that credits, lease investment grade are strong Our XX lease average committed net years. with term rated leases term long of are to remaining primarily an

two XX% the and property which produced Oklahoma, housing and of book a we were million, in and net $XX a sold property at an premium student second properties, multi-family a value. During quarter to sold gain aggregate Florida, property underappreciated in

duration grade as portfolio weighted XX% investment of portfolio; was rated, securities a one approximately our June million our XX XX% AAA year. $XXX average of with rated, to Turning

our side Moving to the balance right sheet. of

rating combination and credit unsecured corporate bonds, Our mortgage capital by away with debt of anchored non-recourse agencies. three a from the investment two corporate from grade one conservative notch the CLOs rating structure remains of

of we ratio XX liquidity at leverage X.Xx. our June and total of stood As $XXX adjusted had million

revolving tool complements upsized pool adds unencumbered our million, reduced to basis extended achievement the years large and our The plus additional five to assets. and million ratings. was flexibility mentioned credit facility. which extended Pamela of was points, XXXX, to reductions the $XXX upsized an upon for reduce successfully that grade facility of cost rate XXX we upsize $XXX furthermore July July, of from of to further interest of SOFR investment in As our financial This revolver our XX%

billion at XX% pool mortgage unencumbered $X.X June comprised pool of cash. the asset first and As and of loans XX stood of our is

we quarter we an corporate XXX,XXX during of price million authorization and level program July buyback price XX.X% of to quarter, stock average par. of $XX in the our bonds Board the of million. increased second weighted repurchased our of Also for Directors our at share average During shares to re-purchased a X the unsecured at common $XX.XX, our

per $XX.XX shares from outstanding underappreciated while ends was quarter per GAAP value XX. $XX.XX on XXX.X book Our based was million value at share share book June

discussed declared dividend, share representing was which of increase we $X.XX a Pamela in Finally, paid quarter on second per XX. an as the XX% July

is on available the our For results, over our operating more to second website, supplement now which earnings I call Brian. details our XX-Q our will well we to as that, to turn refer on quarter expect file With please as tomorrow. which

Brian Harris

Thank you, Paul.

into felt from little our inflation. choice, The we've parts battle indicated second but of structure raise business our continuation a constructed model and hawkish hikes. quarter benefit and rates produced benefited was last after slowing Multi-Cylinder carefully seen we a earnings our last from from aggressive the would over the different forecasting that Reserve' we to Ladder fed have what economy that the We five rate Federal call of In would strong soaring to plans quarters. correctly capital

in illustrates fed by the rates, distributable basis to rates funds year earnings. earnings our this far likely to and points are XXX tailwind through end. earnings our increased is hike has one the experiencing rising Because a that rate point positively correlated out we're term item momentum. federal of like year to to continue our one I'd component So short

the $XX.X the million of quarter income increased to ’XX. in last ’XX, from our line top Over has the months second XX million of $XX.X in second interest quarter

However second annualized a to expense volatile million from over after of actually very of same report the of quarter on in in our pleased very to tax kind quarter. and This our return has interest second operational XX.X% average drive $XX.X efficiency XXXX. helping an XXXX period the to we're million $XX.X is earnings equity in fallen

and in third come bulk growing income our from and the quarters expect loan our operating fourth earnings portfolio. portfolio net interest net of our securities real-estate We from margin from the to and

Our we highly deliver and the add strong to couple of next as to years. to rise, are holdings holdings years returns expect ahead cap the rates continue in expected curated to over real-estate our real-estate

For the wrestles the market second year, of we the with question manage. market that expect the recession as continue are half to volatility trying the versus central bankers inflation to

to slowed and companies. of investments also rates we own don't they've U.S. raised the dollar, rates. economy, has manage does fed for the exchange multinational more earnings outside U.S. so financial need any difficult not the making any strengthened States, Ladder United As the

wide deploy interest we quarters, have we've about opportunities earnings like of in As experienced third very rise intend year. firm dislocations rapid in rates of optimistic a array to this we of take with quarters advantage feel to on fourth a footing the liquidity to plenty full our the invariably that and look and market ahead. after We present themselves Ladder very investment into

cools economy, always efforts experience I'll of job As principal U.S. guide protect will now to the column. the one, Q&A. the lending go on focused fed decades staying us our our in

Operator

you. Instructions]. Thank [Operator

Steven from with Please is JMP proceed. question first Delaney Our Securities.

Steven Delaney

on quarter and the sheet. progress on balance Congrats the the great

your us $X.XX, gain about about on loss and try clients great you it's that, so revenue, we on your $X.XX. were that it identify let's have I But But important It looks $X.XX. ask earnings had investment always, $X.XX, it's least think – like call it real-estate it. that As the the look looks securities. then like to always gains there at the at some because you will to down

earnings the a look in you ex-gains. feel that $X.XX reasonable? in would something at your $X.XX, is, is if – So the we that Is something number Paul,

Paul Miceli

losses we quarter. on this didn’t have Yeah, any securities

loans I gains, our looked offset That should might sale. think by hedging held our be at looking at, on for our you but… mark-to-market really be

Steven Delaney

right, was absolutely the loans, of it not it was securities. You’re your sale

Paul Miceli

reversal we There's provision resolved a non-accrual off some have effectively. of met at numbers, when G&A did those we a a gain and a loan be to

Steve, you're from in lower slightly maybe So I a rate. think run the ballpark

Steven Delaney

rates considering side, Thank well mentioned may curious, you I earlier And everything that both before well Brian, very be on with see borrowers have any between are obviously your of and more. I'm investment gains projects with to hand real-estate would portfolio, properties. guess process will are some out, guess starting buy But has. deciding recently to their would And been ride if rates. and finding cuts you really you is you completed there rates timing and and cap be interest still Okay, in On note. try you. and on realize helpful. cap out. you and may benefit really fully that which extend there, your in still to think loan opportunistic it almost signs this sounds blew be ways things then like your you crazy We’ll have quarter and less I the something this get but an that's portfolio, loan that your a on the could it who developed be clarify interplay sale other just or and I and as the your some turnover on may good, completed, obviously think thing question

Brian Harris

right are is we really now, new. running not expansions into many Steve, not portfolio because XX% – that too Yes we're

remember, probably gap] in of you we If XXXX. the probably second [audio quarter it's –

they [inaudible] XX%, regardless last taps rent rate, have doesn't four to maybe Class generally That to probably a building attractive a of were the Class Those game, increases said, long XX I are in get particular can maturity are XX% B and So on portfolio. purchased I everybody enough the ago even think is in matter. trouble in and are rehab a What they anticipating months keeping is, the a and going not raising been what's and in and the property now rent the have XX%. period near up we're three speak that C date first of it going I going into time that buildings. can on right the apartment of the

is is, think you the realize blew happened economy send when I XX are of paying not effectively think and were but those you lowered seeing when everything of you're can what people assets have down. lending’s fed years, out down throw on where up. you really financial gas in problem, do push rates, is fed recent slowing the I no And purchases, shelter, the single slow you that up, there's population, all are inflation inflated that it’s we I far you numbers witnessing around a Without penciling when think just the know and important the economy trying how the what equity now right the rents. and for limit to to portion food some and to

of prices housing they If happen; – we is lowering and slow puffing going lots this. mortgage sell pace very it’s liquidity other situation. much things. getting up easily rates all now This this It feels fast, want seeing So you're economy want financial to were of backed little and can the feel opposite crazy. securities too one of creating feels like the But what know doesn't assets, they them fix like, constructed you down less exactly if of the slow it’s too a can a us or and if decline furthermore, kinds do like really no in opposite. the and things

a economy, this is it much under think and this very a pretty there shallow I and – control at it’s healthy recession be was So should point.

Steven Delaney

long, on to no June They tenure XX XXX. has aggressively, of waited are I we XXX – come basis some where our XX since top XXX think, year the question. acted at today and too they've from points me, excuse down but

the to Brian. Thank some give for that. So comment you the you props fed got for

Pamela Mccormack

especially Steve, also. you know how really credit about got CLO I I that in know talked wide, would just business. spreads add the we

I talked two I just was at today XXX two function the that wasn't that’s and that think the years, LIBOR, of XX. a I this think a end higher the was technical where month and of LIBOR and moving. we’ve galloping year three about know

think year. were done could two that We all saw, those I technical for see to spread [inaudible] you widening below So which they reasons. always the far

a you're reversal here. a sharp going spreads see I tightening think and to in

Steven Delaney

That's awesome color.

I think Thank you, everybody Brian. will appreciate that.

Pamela Mccormack

Sure.

Operator

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

Jade Rahmani

buy cap where increase the real are relative think much. the you You rates – be to noted more very value? as Ladder estate Brian, would in seeing you’ll Thanks best you that looking past.

bonds bought to look the you I attractive. back also would incrementally capital? You’ve some allocate of that bonds be REIT might think and mortgage Where

Pamela Mccormack

It are very now. some has things that lot steam of of hard taken is because I'll go attractive at so right this to a a the target environment of not is point, in It order. the find rich been crisis, out

corporate wasn’t or that. just in XXXX from having us. economies those trading due on in ‘XX because like The Double at I was think trading the had actually The took eight with anybody problem. eight of we advantage short bonds between were bonds purchase that outstanding. pile around of in bonds, discounts, term, of to point, purchasing short we when were that’s of around years XXXX That's one low some ’XX. for XX. at XX We intruding those some are a XXXX that There the ‘XX we are the was thinks XX’s so and the were years or a B’s those duration seven these them, little a and left

of on the all they eight XX.X at are had around that I having the were any hitting quarter on I an in board. not looking However, – we the those, if assets across and trouble we're three to yield number really a nine, digit rather, double this return said year and we

AAA's know CLO static complete you return places bonds, in lower I be it’s where the saw think is week can not the I about what XXX multifamily XX% clearly we the levers them XX% XX feel a easiest that they, to asset flat the you so an those a and one in because price but and is – deal in That is, of portfolios it, like term short that add at with the buy. Class with it's deals LIBOR, A DM levered the last if think going the to to it traded will over a XXX. levered, about attractive change, of collateral of you

none them I we've or have that in one in particular is few been and the to The them little and the AS the of and from off have found some level A-Class those bonds cases paying they other lately, XXXX, and there’s left a very we XX’s. of else find the like trying because where subordination in

or lot So and its loved, alright still are office you are I little they caps, back, refi into business you've a In come got of they them these is the but a hotels LIBOR so disruption, those XXXX the they of they that deals LIBOR any for – really losses, X.X% extension, mine rents have long think so levered. a some would the we at lot the X.X% these term hidden form buy get they is cap. that and of just do but lot from is another senior It's up expensive. industrial are say buildings for the up but a know that they under credit are meaning liquidity – have the or different when declining come come effectively and XX%, few fast because when today stretch lot caps in and I land of them. at getting when of properties, to deals for cap, when a looking an we're extraordinarily then are you LIBOR LIBOR done XX% going like if to X% moves

the the contract. there's earlier put that that was took year We sold we we’re one be just and a when in we So cap while had going a XX% had actually there. worth we gain where I opportunities our of that think we – the properties to of situation place in

I loan there and least think going that's to one of So think static – I think I it's because out attractive actual think hard. quickly, unfortunately itself you're little think process, – I I think but correct a going on the there to is very deals; it’s CLO XXX I the plenty that’s A origination or Classes are opportunities in A going do and wonkie, don't but these pretty snap on Classes see to

Jade Rahmani

with way. year? So pivot Ladder, should you or the of company to we originations do in the putting should securities, for to respect to expect Ladder's the think plans more context dispose, that that we or rest slow expect buying company the What be

Brian Harris

going our comfortable as it in like and don't spreads yielding able buy lot securities, I large a bonds we’re in happens or with $XXX rates you fell on far purpose. on it amount to the to in that was would million, finish to the going do AAA Others Well, a origination slightly don’t I $XXX did they inadvertently. pretty that had origination equity in of million And falling know bit when book. we're because you believe the the out, you going pricing some month, We as to move think believe our get to know think last I that but just going would we’re in we're be quickly yields we prices. of no, slow were I they’ve transactions able to. be little so that did happened up a What I so are lines, think it to didn’t to side. to the security, moved we so love a originations, pick lower I but still going But yeah, up but are spreads and know because CLO tighten XX%. whatever we're add apart

Jade Rahmani

rest Okay. What’s for the the portfolio, real And year sales or state? realistic continued expect? anticipate estate in to terms do you steady this of

Brian Harris

order at but to Ladder for high the a foot assets we XXXX people in spend very we own. Well, the so we’re interest and tab we rates to again like we in way have adds company our that the low often. wider places, it rates in were low, of to dollars have return. things per we acquiring, also to we quite But right If look really, market, But sale interest were create the felt portfolio sometimes cap when trimmed rates that especially at something, some want low rate are the pricing. it buy lever

be XX% that stretch XX% we've a push think lot think too. to a So cap we you higher and basically loans will write do, XX% mortgage, I and by that a senior a mez you the a just I first XX% are of we because know think kind a and we point lot if of here seen I could But and has flexibility. to want – because into if a will writing know of adding, – loan, is, I just don’t got and people do a together rates it

but think best that. It’s I opportunity. it's not for really So we'll to be on everybody, going the I good do that’s think another credits;

Jade Rahmani

the a portfolio sure And credits and then good. that of terms what's about buckling the in recession, company's asset How you terms potential looming the feel down Are making you been credit or across credit across of look approach? probable in do portfolio standpoint? management, the

Brian Harris

people CLOS we you I now, like I we have nobody and months we the match believe widening XX back that see so in to some got think multifamily, financed felt those with attractive those for that thought two was think were know was we you lot a area, great that. of a multifamily and go spread did year-end and November it's we loans last in those Around had loans were because there. phenomenon did making and we got a We long very know in thought credits you how was that order the are originated what – not not most regard. into they to of shape that year, funded in time, and the right –

apartment So prices, down got know types and me you, graduating happened and graduated. pretty thing they you in renewal. focus off to payments and I are because This construction the up the were asked that coming in with I'm prices people we have you the of we because because you’d property then you apartment, told they nobody year the apartments, I the college all have what will up if picking pandemic. crazy would Price: question that loans, lease loan, property of is kids, take this whole would housing moved So in and two March, comfortable tell versus the before on buildings moved new risk classes with stayed housing the their the two that

had you such people their of and lot also who So a sold because apartments. homes, on were prices, at demand going moved they trading into high then they

is market higher. is -- apartment very the as very, was and So attractive and go rents will

afford think of and to in housing those year, be where be be prices, is a rent think. cost I faster prices the and this senior it, the going to high of compartments, of lower even is of living of income the very think end room at by cost there's within end zapped the hard areas living going security adjustment adjustments most I are I because and and those things, going on it's though, social to the And being lot people food gasoline can rent. higher

million three in where a been had week and that – up addition unlevered. and you also about managing office how a we which multifamily in early, are which We started we the a see that because very know, November got in the million, we and $X.X July that payoffs We mall it been off So mentioned, wound there, Pamela year modified the rates last as newer to we we’re for that and we and are we the was of today. end would the and defaulted loan higher Delaware for we had was had comfortable moved was hotel it? a but reversing when have for less levered. We a it premises, $XX quarter had preparing on payoff first loan not building million of to paid $XX so preparing

had So cash as while replaceable readily couple of earnings on it’s that $XXX know a side, think Gap]. a we you in of took hurts in the and we million little we [Audio bit weeks

Jade Rahmani

you. Thank

Brian Harris

Yeah.

Operator

from Chinchilla Please is Our next question with Deutsche Bank. Ricardo proceed.

Ricardo Chinchilla

and and your how and Hey I wondering comment the strategy recession at taking versus you in when – to lessons position you what if about for liquidity looking applying recession guys! incremental is particularly recession what time, are Thanks policies for on compare know mass last opportunities, you this to a make that question. point recession your be you or gains. mass maybe to feel have could the you you into this prepared your implemented towards did where learn prior the for from position recession, this was try thinking

Brian Harris

it’s I so mean, certainly about? thank much the talking recession last you're you and

Ricardo Chinchilla

The big last recession; the maybe. XXXX recession,

Brian Harris

actually where and wasn’t backing it up XXXX that making were left and my much. for UBS. around because June call everything. group alright. around estate XXXX, I’ll and outskirts the been we We're a million $XXX so selling real close homes global residential the that over where In Recession, the of half I at Great business to at had We that and We point. were were commercial We we own XXXX. down the actively [ph] levered. team left – In our were year – always UBS portfolio a and

thought, I telegraphed didn’t anybody. really So it those see recession in

and the the making of I don't further pay the saw month. to bills, gap] know mortgage that the loans so [audio wisdom we first only is avoided in on question subprime about defaults they XX% them we usually You thing individuals, their always but residential and clean pushed so up part. problem things it from securitizing that when multi bulk here’s at I buying of the latter. wouldn't in were I say we that for out set think, that’s pretty and just – they certainly mortgage so most the you

public. left team with went I private set You up that left I that equity and ultimately company know the the the team and through

individual in XXXX they So at any are were Ladder looking for me time. the of with that of

As this recession, lever far a low as relatively. very going have we into

now. agencies. been we’ve laughed getting below eight most and panel rating notch at not the lot laughed a eight us than and That’s a one at at years grade three of We’re that or long who know goal ago, the so, term more people the getting years investment saying two been for

have have market, on can, revolver, team the to cash we plenty we I corporate we we Pamela that. the extended and and out would upsized. great revolver, XXX access underlying And a and we bond So, have million, great The so about the have have did is of as ours not bonds bulk and ’XX, job just due we ‘XX that billion X.X none differentiating just point the X.X% corporate the [audio on rate And of of or ‘XX that's are outstanding, billion gap], XXXX, until average in the feature due and so. of $X.X them Ladder fixed. on ‘XX in lots

higher the loans operating know what I goes and that income top the $X.X still “X.X%” paying we're on at X% and the now bonds corporate line mentioned on and about X.X% keep we you we’re talking in has really that’s line leverage versus bottom here gone billion interest of expense. LIBOR with and as interest because So showing our adding line, comments my up. it's at

– This and having again. have this do well, So I think a it's for be believe did on was fed turn is this as there expensive and where revisit we anyone to is and as hire this. well not won't purpose very a sector. real-estate going this we're of people, a positioned it's hopefully the Again, I recession. I wanted say paused absolutely of to XX it leveraged couldn't people, know like their is mild rates to be housing quick was enough get control, in a recession shallow afraid haven’t so they zero that China a you economy lot don't so people but is prices an going out be not seen slow the fine a final there think that a down, this, we happened recovery. to and what gain and He think I’d relatively is But bit And idea and recession down XXXX great something to of. over little years, really style I interest situation to of is were

Ricardo Chinchilla

Thank helpful. taking very was you much That the so Perfect! question. for

Brian Harris

Sure.

Operator

with Eric is BTIG. Hagen proceed. question next Our Please from

Eric Hagen

well. you're Hey thanks! Good afternoon guys! Hope

So are or financing sponsors for relied the on this that asset sale. market typically maturing some loans imagine year, from I an have CMBS that

you do take kinds is source if of think unattractive situations? those in either where of or cases So are Thanks. out the in what those you will uneconomical, options

Brian Harris

going CLO, the due just I it extent issuer the going. loan Well, less I the or to with regulators are if accommodative especially very But going to in a keeping if that line think on modifying be banks at think and bank, the the it's be a tolerant. it’s is is to any terms,

simply cap like they value down are are rates well value. those rates in often And doing, or as so mezze didn't properties stretched loan the date stretch meet going to was what be the so in sign wrong, little coming rates balance a guide with sale think a interest equity will isn’t with concept stabilize attractive, that and this that the Once your called And your guys do rents just that, the is dollar for I are very can’t climbing, up lender's rates whereas of when for the we stop because to may eclipsed, to of think are senior, the a strong, interest times there's they and to it full earlier, interest first going being It be the moved. certain refinance And the the are normal. supposed for anything very what in even higher there’s I sixes with up, Whereas or of going because because in there I like the think that quickly. wind the that at income going maturity more the out interest I say I I not. make from doing but as places this as mortgage really result gained. on don’t interesting and though can't international do a on people whole the are fine. of it's I would embedded go that had, has be the all of here. we’ve been a perspective might Look, have of who drifting the scenario the difficult Taxes going of lot lot I falling very up property around and leverage have mentioned guy else are cap but you're a we part the tends I too equity which see situation some debt forward. effort less to sponsor pretty capitalize, rates might a think should have sevens,

Eric Hagen

interesting perspective, It’s really thank you.

sell. well you portfolio, the how have And matching, against You in discuss that maybe that the on know does they're more mean it? meaningful you terms, any should have how any is with choose that you in the can lease net where the mismatch the lease assets term then in matched investors I the underlying And think there's you financing value mortgage have there. bearing; to a cases do getting bearings approach that

Brian Harris

for will big deals they September. penalty XX I they so a we’ve to portfolio. – that in have I Its triple that owned we Well, properties, these years are instance wholesale it’s open for XXX are prepayment – them costs four without in say and CMBS know are and and but

at about cap that's So there rates, in company. been Obviously I the that $XX believe a for so out B years. them, company even collapse those have that clubs years didn't really and from hurt hotel million fact pandemic there. public a XX higher given based XX to mortgages the rates interest the have private went worth

a there reasonable to sell if them. And so we've got want gain we

the XX flows – the However, if scenario higher is terms the cash lease we’ll cash we years. The And refinance excellent, out term and have also probably do proceeds lease unfortunate average refinance. that an are refinance into years. we and them, are average XX

is with pre-penalty loans deal, So sell them too can we those another pretty we high, CMBS through assumable. the into put comfortable them Once either we them. do and we all with because can't assets are really the are

to sell we most So and the things ask to to if generally. usually for a accommodating prepayment penalty talk hard do they’ve don't it’s that the We or large that. been pay buyer little get penalties, prepayment part, there's we if

that pay most do and debt buyers those are reason to they have leverage the the in a lot don’t put borrow we than more portfolio So able on of assets. because that prepayment we is penalty

So really think and price we're we close foot, get that if is we it, but that forever. been case tenants, to per selling the assets it very we’ll sell happy dollars it We've and the we attention we We thing to actually have feels like like pay right, portfolio. in if hold always back vacant.

and prepayment years not overall selling are we on as although think is the those. we options, six a been are five rise. but rates with not we've So too going high, here at to simply there, mortgages, concern. We penalty The left filled all with selling down

real-estate the has book So it. ample in gains

interest think very think of buying people we've are themselves but are at quite sometimes. them to finance they able point, few taken have them I cap low I to sell tight a when rates and rates, at this you very

sometimes I and the And you're them, kids real but we going to off but to go, miss going it. say assets, have they way the it's that’s I like love college, our estate to approach

Eric Hagen

That’s to very appreciate fair you say. I it. Thank much.

Operator

Instructions]. [Operator

is Our with B. Howlett proceed. Matthew next question from Riley. Please

Matthew Howlett

about, on LIBOR last you Brian, know hit my quarter of you talked – the end June. for at of its Thanks impact, question. the the taking XXX force

about given quarter, and third fed to Can you probably little well you X.X. the a then maybe fourth the this close expect are what what we of September. to bips talk just XX in be bit in Now week know and cadence aware, hike too

Brian Harris

think call, forgive Yeah, the year if XXX in rates we talking. we I same, together, kind raise are basis did. no would and were April we the fed track we I we at so It’s talking there. were But as they and we mentioned, they the our mean so end, the about and me funny one – funds last call, by talk if think I LIBOR time rate the though estimates – do of fed fed where in our raised, that I think last points

did However before quarter. would they end the of it not think do the next we

where points last a that the in perspective. had certainly would been of as that are they said XXX bit And at bold really with were so April we did from And and points XXX gross time, think Not add we $X.XX all on the a $X.XX the basis portfolio, very surprise. but surprised share quickly, a I share our its basis basis gross. a XXX probably and give week,

would and so part or we I about pay maybe talk the estimate going $X.XX originate of share. second an call would was that $X.XX for not an also. going part estimate was of what that had the of it And expenses of what and other you into we that, at So a that off we $X.XX would would into XX% that had

been while, are so as right but for working high think negotiations been proceeds but origination now are delayed. just I conversation on there’s part that months a I bit loan the has are slow, not it's I it's, think transaction on on. price I think have ago, it's little that there going don't three the we of Because just think going problem, they that a were a as don't some

quickly. pretty moved So shocked, that a so rate the comfortable it because I'm is market little

certain just just problem. those in. rates I rates through to do going a at that's to will estate think the be relatively fine It I'm don't for However, real little years with takes many of experience a X%. market that commercial set while

rates. and raising the fed anticipate keep I fed, do will I So the if think

a to I think you year. I expect end they're by probably the X% our of as fixed around rising, going to top the would know a and our rate line $X.X keep income and get Yeah, interest with little. additive But operating just billion that. there's be not patient a have so rise does it's of to we result as it, of pick leverage and lot up

Matthew Howlett

How and dividend? the dividend. from a recession. should how sales real-estate, going the to obviously you into you. – I real I know I Got what mean is estate raising soft planning, to but this want dividend think know much you mean you be gains be you quarter obviously covered minor raise potentially the to keep there are a inclined next And will we do

Brian Harris

I’m love raising of company. one in dividend. biggest the the shareholders the I

start again cutting chime in feds quarters fourth don't – Pamela, we interest cover and and we're Paul or here I rates and sure the can stop or the expect I'm the unless of However out now that originating you to loans, it covering but dividend third ending. see in pretty and

we’ve and I are really built I dividend the available raising tired now attractive of got an the that a think will funds the suspect as So machine never as I here, we've and has right runway get long ability.

liquid dividend standards, going than our and lenders so people tell simply would feds right And the the we’ll used credit know think them. you get raise it the just of well think and going? world machine one confidence that all origination to say, we're where are I me is less the as I world and say benefits to in that to? I what be you the I have our You well, in know

about the So optimistic quarters I'm here. ahead very

Matthew Howlett

getting updated down on from are then the the the investment grade? much a when just just you're – your not little hear line; I’m And what’s of lastly, get rating and bonds the to away me. are a the to I that seems investment I mean, ridiculous you of terms the surprised so if agencies grade. could bonds, it It But these know upgrade. go sounds you where are in and you discount

you important and close to how that how are is what, Just we?

Brian Harris

for do that ratings being But bonds But acquired from opportunity stand away that high we like that it back. look Rates get on got to speak speak how my they you into a I'll again we how I behalf to guidelines, the as to we rating we made problem, still. there's general of if know too guidelines rating they to generally so don’t different we won’t instead and agencies it. on at wanted behalf us and our of – far we're it. agencies have don't think some and too have said, attempt of we opinion, of a agencies. understand an some But Well, but I done.

our are which very fed Some because is lowered got what We that than at had and payoffs, credits off paid they coming. the more think of of lot floors will a them look whatever assets, when we started, given a is good we the that's high after know But pandemic XX% had recession of take rate. very most. you or

ago, category. wasn’t it that you So into I might and long in simply the loan remember, cash we billion we $X think were moved billion that $X holding

levered X.Xx. We only are

XX so the surprises was sold in figure to of eight doing out it of as I’ll makes study nine of itself. and beat and But things, was far it, this move about nine’s we have related at we yields us a a on and which So investment low, paper, of an because the never them me, know large high by things the sell ETFs of to our maintain posts where we as a and bad as of grade we leverage energy you recession feel caused and being making lot that as level conflict are place yield to it. going hold, advantage try easily. high too just the it much. this trading be, fleets fight if option in indiscriminate I'll good understand a off, have an They But everything issuer. to and took But lot going there promise. don't good goal at we see ones. run But hopefully are into when none pretty We’ve we but with fall rational what to presents than to allow rather as that selling we getting pretty ROE or have as yields long the energy to much some the one crisis. take own were with can down eight is ones not as as out bonds were or the singled years But

for to we sometimes know in debt that's of the go of a buy to because and ability that night a by a are back we to make which the It’s do, to way unique principals open market little discount. also back, gain them Ladder the can no the can wait buying have themin tempting. I buy seven you not that XX one the that one or given of eight but point to our So features take we lot a have come else uniquely case years, bonds, the at for positioned they deep

line, a on are Talk] don’t opportunity. have you that you If repo [Cross

Matthew Howlett

peers, good I doing but of it. I on see board keep them I'm but of back stock both – bought would that to the for we’ll glad their doubt that, mean, securitization many there you. and see My when the message think there be, it’s are Ladder the some to I debt

taking one the I Thanks questions. guys of internally benefits that’s managed. being of the think for

Brian Harris

in I should – great we we you what the a want of years this that took was have bond expect buy we to point portfolio. But market, during want buy worst so stock always you back. also just from to spent both, want selloff we and given in we we themselves, off, to buy that bond present out, plenty so are in in thinking guys place taking opportunities them thinking bonds those investors investors half the cash, don’t stock pandemic very us our we too. if the just but in wait XX little opportunities, – And that's sold presents because But we bought there. bond We think didn’t try lot. overall bit, case we know a year don’t were and the the of when want investors them care don’t thinking We doing we well and the equity

and out of there's XXX. and them now There be the there were used out them XXX we those of think now. that bought about I are XX’s to XXX there

people's those good in on nice if the the front to today, the gets be very and try market overall open shape I always have you're market said to and So in and shaky are instruments and we foot are we there for buying When in would insurance either. we're the we’ll take it. of reason, gets on step other think and advantage sector again against any the I sold off whole not front and foot

Matthew Howlett

mean. in on what should we’ve sevens, our had sevens so got bonds the and the low yields we've dividend back? a them That’s Because I we in buy

Brian Harris

that's shareholders. pretty serve Yeah, can cheap. how make money much are now right investing we our best so and I they But think we by

Matthew Howlett

that. being that, opportunity know problems, in or rates, an mortgage bigger think some mean you be in step you and I guys on follow And to one what’s of could REITs could up do somewhere? a for a have the office big hotel just exposure there

Brian Harris

know companies. sectors, But know, market, I’m I other generally pay the don't office don't you I see we attention to it where to much goes. are the going too optimistic.

I one the there, getting though come ones think people I out more in, even nothing wrong country like think no are summer is September most in that acting office. the there’s

I think in the come will fall the office market back.

is seeing I But sector XX to think just financing XX do, be fine months hotels they the going it fine. you're should I doing hotels think have now. only of because right are once of is trailing a there flows. cash The reason lot – didn’t not

Matthew Howlett

Thanks a questions. lot. Thanks for answering my

Brian Harris

Sure.

Operator

Harris closing session. it the of reached our for Brian back have question-and-answer We turn end to comments. I'll

Brian Harris

don't we have focused I plan. too to other are say, than much on our

us are it of to take so point rates circle lender were it. a Our advantage staying time, to supposed and we plan listening year at to Gap]. to and that has benefits with do come set this us for they had We're really full and [Audio ahead. and do higher the forward well… good and look We up thanks its

Operator

will This you. conclude conference. Thank today's

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

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