LADR - Earnings call 4 2023 | Ladder Capital Corp

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Operator

Good morning, and welcome to Ladder Capital Corp.'s earnings call for the fourth quarter of 2023.

As a reminder, today's call is being recorded.

This morning, Ladder released its financial results for the quarter and year ended December 31, 2023.

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

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

you earnings today's refer metrics call. definitions also which to presentation certain We our Form and of on supplement XX-K we cite may for

the At over McCormack. Ladder's to this the Pamela I'd time, to turn call President, like

Pamela McCormack

Good morning.

Ladder's and fourth for We are financial pleased performance full XXXX. to quarter of the provide year overview an

In generated quarter, per resulting earnings in million equity. $XX XX.X% ladder share, of or return on $X.XX a the fourth distributable

reported $X.XX Ladder a of year course For earnings and $XXX.X With distributable of full financial the notable achieved demonstrated return or million metrics XX.X% asset we returns. across year. higher strengthening XXXX, over the lower base smaller key the generating share, on Ladder a per leverage, equity.

X.Xx cash Our stands securities ratio at cash and investment-grade adjusted unrestricted equivalents. leverage and excluding

book Distributable $XX.XX. earnings value and increased XX% year-over-year undepreciated to increased

correlation Our net positive performance XX%. financial benefited rates from to with interest rising a interest income growing

cash fixed XX% at increased over low with this we We and equivalents benefited and position a to contributed weighted from of growth, Our of year-over-year. by to $X.X to capital billion unsecured unsecured up year-end, liquidity commitment bonds structure an average cash our $X.X billion X.X%. rate coupon

$XXX or securities, loans of or by $XXX XX%, Future XX% our a was from assets we commitments total by received XXXX, unencumbered and approximately In in reduction accompanied cash over to billion declined in also which assets. XX% increased funding total leverage. million pay of downs and $X million

dividend. of Furthermore, safety continuing X below reaffirmed were agencies our reinforcing agencies rose by XXX% to In in rating credit all with our notch also durability just addition, dividend year, and XXXX, X ratings rate the to coverage the during grade. investment one

company's trends. of In financial positive market the have these position, disruption, notably our evidenced as actions by face strengthened significant the

XXXX, have we positioned to to As efforts us pivot left our quickly well enter offense.

to particularly market compelling new environment given middle continue the originators like for offer lenders in we Ladder, market by an pullback Our for explore investments the will well-capitalized opportunities banks. anticipate the

loans, market. of strategy a middle broader smaller range to unencumbered from the in repayments, by our $XX office Regarding start the of in year-end, of asset originating the capital an reducing X we robust loans from office payoff million our payoff approximately to $XXX and access full of proceeds million balance including our our includes we received XX attribute XX% for $XXX loan portfolio, portfolio approach Subsequent through or This payoff the repayment refinancing sales. X additional the received million of repayment, We amount whether loans. of the in This the loans borrowers loan. from year. of sources proceeds to

weighted balance portfolio million. of loan with sheet XX December and X.X% $X.X of at average $XX size a average Our stands of loan as billion an yield

at contingent commitments that future favorable approximately the of totaling developments other $XXX upon million, or X/X only positive properties. funding activity underlying We limited with amount leasing have a

our the Pennsylvania, multifamily nonaccrual a Upper proceedings in had resolving the on on XXXX; loan X discussed In a been This a retail the on million on of $XX quarter newly fourth side of quarter quarter, we since $XX includes loans and earnings loan on successfully constructed on nonaccrual. Manhattan, Pittsburgh, concluded a second foreclosure West third which property million call.

in portfolio collateralized placed fourth we by The first on is and the Los to nonaccrual of loan during million the California, loan status. XXXX. anticipate taking renovated one half $XX in quarter, a Angeles, assets the title multifamily Lastly, we newly

did any discuss, during continuing of As expect to Heading align into pivot not quarter actively current the identify to portfolio. to we our specific market Paul XXXX, our general and impairments conditions. with we assessment will loan CECL offense to increased reserve while monitor our

cases, most new more palatable meantime, into investing the Despite their In banks capital assets in pullback reduced CRE with short-term rate that sponsors our stemming our who, regional continuing interest any environment we're advantages outweigh like from space, Ladder, to the lenders for for we well-capitalized obstacles. we've market, impacting this work the year. lending long-term in liquidity our from believe nonbank expecting competition seen later

That consistently as between make challenges we loss. a a default we COVID, a by posed have and distinction the said, demonstrated during even clear

As a capacity proficiently owner, we and estate. underlying only to possess the manage well-capitalized real estate experienced real the

Our conservative the be navigate quarters we basis, ongoing objective maximize to will environment. upcoming rate value at interest the our as a particularly current higher now loan for with

portfolio. estate real and securities our to Turning

in course million year million comprised securities portfolio acquired paydowns of of earning of the $XXX the million ending primarily we securities our AAA unlevered $XX positions, an received X.XX%. $XXX a of new XXXX, in Over over portfolio with and yield

the portfolio, million properties million of in $XX fourth net quarter lease estate $XXX contributed tenants, mainly with in rental million to investment-grade net comprised income XXXX. and Our long-term real leases in $XX

entered substantial dividend. we leverage and a dry XXXX strong well-covered with sheet, summary, powder, balance a In modest

remain the on the to to for reset, As that positioned deploy themselves our the well will loan we we focused market and our estate are we right opportunities rebounds. present real activity continues capital credit as existing transaction commercial believe book optimizing of

With that, I'll turn to the call over Paul.

Paul Miceli

Pamela. Thank you,

generated or return the Ladder XXXX, share, in fourth distributable of Ladder XXXX, $X.XX of million or per distributable of for the in $XX $XXX.X XX.X% full discussed, earnings for As earnings share. earnings of distributable earnings of year, on million per $X.XX And XXXX. equity generated of attributable quarter a

rate our structure. driven earnings strong robust operating benefited by liability fixed real were and income interest steady primarily net our Our income net a portfolio and XXXX in from estate from

as fourth $XXX XX% million. a assets. totaled Our year-end of in $X.X book This balance sheet to the offset across partially total which fundings XXX on of was of The portfolio continued $XX and million of loans represented billion receive loan paydowns our by quarter, commitments. totaled healthy existing rate

previously added we XXXX, on the foreclosure. completed foreclosed previously which our in ability assets an on quarter REO where $XX one in with proceedings totaling for we produced maximize X gain we XXXX, proceed the earnings, million. hotel foreclosure Overall, nonaccrual distributable to X As value asset assets mentioned, of fourth million loans demonstrating and $XX sold on, $XXX,XXX

portfolio. our driven macro by estate conditions. reserve approximate our U.S. an real the commercial view In fourth state increase the increased general CECL the of reserve macroeconomic $XX we XXX The million of was $X and current overall to global or points bringing of loan our quarter, million, market by the basis

to by loans. the size, small the given million of proceeds full which believe We diversity demonstrated average our credit in portfolio as from loan was payoff from the our benefits and collateral, XXXX, loan continue the quality as granularity of well XX received geography $XXX including in paydown

real properties, the earnings. Our a source providing operating $XXX estate lease The income XX% segment. to well, approximately XXX to segment perform net of our includes continues representing million stable portfolio net of

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

of rated, and plus source billion, $X.X and same-day of our of carrying of we unencumbered as our rated. financeable, of $X Ladder year-end December of of with equivalents over Over portfolio undrawn being XX% simply portfolio XX% complementing providing XX, as $XXX represents liquidity potential the cash AAA liquidity, was of was securities corporate additional XX% same-day the of capacity an million. the was As of the cash investment-grade readily had unsecured value revolver billion million. liquidity year-end. $XXX unrestricted portfolio

reductions basis our upon in noting the points enhancement XXXX. well basis with ratings. X-year X-bank capital a of institutions. as relationships The term of achievement financial out strong worth This carries plus attractive on rate strength with an XXXX, corporate our of demonstrates these XXX as to new we syndicate investment-grade unsecured It's January structure facility further an revolver our Ladder's with SOFR of interest extended to

an maturity We'll also X.X%. of our XX% year-over-year unsecured at $XX X.Xx, a double-digit corporate X remain debt we or structure our adjusted of million fixed repurchased $X.X gains. on was million down our billion delevered of which $XX.X earnings, generating of while in balance as we with the average nearly and ratio years of XX, equity. XXXX, producing Unsecured capital and weighted outstanding note, our coupon of an As bonds XX.X% rate XXXX, coverage bonds December par, principle in with attractive at sheet to attractive steady foundation strong dividend our was return leverage

and XXXX so credit credit X or agencies, that reaffirming flexibility unrestricted large XXXX, asset believe billion As enter loans, our reflected XX, continues from XX% and all and X in rating pool is or X comprised discussed, rating from grade equivalents. corporate sheet. financial pool cash of our securities of is Pamela mortgage position strong assets at and our balance in asset high-quality one do and rating of stood our XX% of Ladder $X agencies with rating provided first notch unencumbered liquidity unencumbered as investment unencumbered pool to as we is with in December this We our cash of XXXX.

December million authorization XX, XXXX, of That's share weighted common of at with outstanding. of our $X.XX as million per repurchased XXXX buyback XXX.X price of share our a also share XXXX. Ladder's we capacity million. and undepreciated as value In XX, was average remaining December per of $X.X $XX $XX.XX of million stock current shares book $XX

is was paid quarter, in as dividend, discussed, share dividend Finally, a declared our fourth XX, the well per on $X.XX And which Pamela January covered. Ladder XXXX.

on our in which our please we full our results, details to XX-K as which earnings report year our the Form on fourth coming as to website more on well operating is and supplement For days. expect annual file available XXXX quarter refer

With turn to that, the I Brian. over will call

Brian Harris

rate to highlight success why during to more the markets than when well an at things of happy company came liability with to were our and from complicated to to XXXX Ladder structure We years results differentiated start with went Paul. leading I when finish. our our turbulent pleased XXXX. gotten truth, explaining our year. Thanks, very tend ready financial also up it's component But in credit the I large for a in fixed having end debt that.

happened at fewer bonds. what We system fixed highly REIT years finance rate was of typical though ago, issued foregoing unsecured concentration XXXX with and debt, when floating of the even be that banks. XX banking the realized time larger more we line would banks, of mortgage returns, the Over greater business using rate cheaper banks and model after to corporate to repo our finance the regulated a repo there U.S. we decided XXXX in

problematic more in models felt up increasingly against world shoring we bank cushion in as the more some usual volatile they an need less shocks. and So market might becoming were with financing use more

we to the the timing and would fall we only XXXX. cost pandemic it, our as stayed do it been While leverage, credit in correct, a really around vigilance saw to And model. response the bank or We that if cycle manage intervention has using these our that place never while came even had the of direction higher the later just it mistakes a to linchpin serve of company coming founded to hiking when safer items our got with was to global Fed's helpful our we case indicated that took debt success. less constant we cement in avoiding at central true enormous we

than we means, last most over any believe we by perfect in better our years. lending the approach were not X towards While

move has some we're of keeping once few failed, better our the our on last bank where basis part better. basic the with well times, served how funding treated deposits, largely lack to not for a In headaches now careers. in their year, reasonable banks These of the on savers be again, don't and changes savers a interest to a after can see part March changed. us and U.S. in banks appropriate may these at CEOs has disciplined exposure is model in savings regulators, well permanent. for duration approach about banks due easily capital will without of we it difficult their rates very compensate regional assets our in the lengthy as understanding If Although of

we XX $X Ladder, less fixed a we base an ] with result that of average X.X% any an loan mature asset of of own average have bonds and $X.X unsecured portfolio with of unlevered about not than just we because a billion barbelled rather a [ issued is T-bills X.X%. of rate rate At years. have X a that but rather This We return a at we over maturity X.X% and T-bills now in plan of X.X% approximately approximately remaining earns as about earn luxury enjoy days. billion of

This estate these dividend the allows cash deficit in Treasury during us times quarterly while leverage our combination precarious of the at out only is to spiraling using cover modest U.S. control. commercial real

to the Our loans. to fortress-like rates real appetite new commercial in commercial banking turn system our balance success of getting with considerable downturn soaring sheet allows through the real in the far. attention and this with us to finance aftermath interest estate estate current little with We've so environment navigated values

paydowns received as loans. full did XXXX, on we $XXX from In balance sheet which mentioned XX include in loans, earlier, the payoff million proceeds of

level model. to leverage paydowns loans portfolio, liquidity, our $XXX.X able and CLO that further refinancing. having with of as of of sponsors difficulty result increasing our our million business high are a low our received in work securities also are principal liquidity We and payoffs CMBS Because we our of on

after share with modified if pitch received keep their asset capital stress resolve those additional the to we million XXXX, control. some on higher to so with must borrowers, equity from in loans fortunate In our create the $XXX loans. we However, substantial benefit too this borrowers borrowers more far We've in from having new was XX additional large been posted time equity to rates. in

received our well-heeled also loans of credit some We in additional have on full the recourse outstanding. sponsors enhancement form providing larger of

who In currently decades between happens X property of deck one We're is to employees equity the that leased in of States. available United tenant, can office banks case, buildings. $XXX million, more about portfolio, own even worried the one. construction tenant million on triple-net cost years the just be largest they these buildings they $XXX touches our the this with largest for In finishing parking to that our so that we extensions is space another at the worth rent including a and new tenant of a into concentrate not X,XXX putting

daily yet wrap things levels this property here every by hard to to year worked begin welcome for reported of earnings continue last feel thanking of asset asset raising of up we smaller double-digit ROEs come produce done so time they million as in falling Fed quarter, do environment got where substantial a $XXX to We base a while in I'll lower our rates employees our who prices. We distributable If cash. least at the holding rates, will is the relief being. owners. year

is assignments competition intention we large strong With this moving and in into deploy take mortgage than already plan to our less our opportunity. more for interesting And every in addressable lending taking something from of regional banks, in T-Bills. lending have vast credit position holdings advantage indeed private part cash to of

for Operator, we listening. open some the for questions line Thanks can now.

Operator

question [Operator First Barcomb Sarah BTIG. Instructions] comes with from

Sarah Barcomb

pivot credit mentioned remarks to quickly you to positioned for So offense in the private you're opportunity there's that and here. a vast prepared

new rates? originating quarter? just constructive are you would for the cash Or and what I'm as Fed to putting cutting you detail waiting that large for to to balance expect soon Ladder on we when more allow be and start to start more should loans start this work. looking So as

Brian Harris

or heard losing of company lower been are getting of. rates that we've else, not through we because been lower because beat getting Yes, we we the full has should loans either borrower transparency, -- by an this they oftentimes us start in we've Sarah. names applications though, to overly quoting expect also. been have originating Thanks, prefer the companies signed, never the quarter proceeds actually Admittedly, decided quarter. fourth in we've And the insurance lower interestingly, and at successful opportunity to you loans loan rate,

further And so the But private evidence in to are, that fact, pushing the expect last. not would capital markets into that that space. I

capital of the loans. We as refinance We are deliberate part probably and us could acquisitions And because obvious this But point. you quoting our opportunities, amount this more up, conduit what's loans. right there bridge at expect the refi. most plan -- no be now reasons. to We're But be in active. hoarding of quoting acquisitions is on to to that limits market think I is prefer for pick

to the XXX there levels, in the However, been a sitting securities on we've world able CLO T-bill security buy at and with attractive adding rate mostly CMBS and side.

been loans we've basis. daily bought on but this, continue while But of $XX will we are those fact, on think million. In probably than we'll quoting buy we more indeed loans, we I a to make

Sarah Barcomb

relative remains we comments CECL follow-up, my on level rankings the the set competitive to I and a on back interesting. Okay. the loan because in-place here. there, too. have the just low pretty specific Great. just appreciate to risk Maybe going for portfolio don't That's peers

there's was or concern if your rates hoping just of I the certain start a portfolio for aspects whether remain become that you elevated could throughout of to bigger think course year maybe longer. the

on you comment Appreciate start assets, more out those there? see me. vintage XXXX kind keys your we stick maybe any multifamily to coming to XXXX could Could performance So and of there. the of comments back

Brian Harris

Sure.

the We the high was leverage I what in rates -- 'XX would and are markets. late dangerous call is quite available for multi-families were spot because quite low, the really -- cap

Ladder to exit tree continue year. here this I say in the we the the And half when I getting through stress line I don't going this we're believe but the through first feel like some quite I think necessarily we're system, the of we're but see don't forest. to mean we generally. as system in near

because of sure little down caps. to would down we've and I gone And of the nature actually cap hearing, been a rates here what anticipate rates going purchasing are go from think so have for -- forward if bit I

necessarily or column the taking now have there. equity ROEs is a up and losses the we right deterioration yet blowing over debt not in what So

as lower, here long Bank rates week slog. stay pretty as possibly think or this If think is events I the for York of New optimistic. some we've higher, X-month do I all to of going happen, reason, So could that, and Community rates that I'm another us reminder start got go the a

when don't million, today. difficult our million are loans, get as necessarily in have on extraordinarily to small, opposed where I and not about overly we stand other about finance small, focused say we because $XX people and million to CECL small reserves concerned $XX $XXX to terribly relative million $XXX which I

So while right another certainly what's uncertainties can in now, reflect in books million $XX which last the got since we what's X, January outcomes the picnic our XX we on might months, I have payoffs. only and some of on -- come about back was the we've markets, got payoffs. XX And no

So the the in those parts go we're system they've have are the certainly loans of And way, been the far diversification. smaller stress right some so indisputable although around do optimistic, going and points that way. we conversation either pretty could

costs money? the are the to point, However, assets think who extent on So far, ability some of high, of stay you that continues hang I sponsor do hanging run to at to on. the simply out these have does sponsors wonder

materially got their come or some worse across. availability, properties it if see we if However, then they might yes, simply exhausted equity

Operator

Next question, Raymond Stephen James. Laws with

Stephen Laws

ago? Sarah's what relative mentioned Brian, you a do wanted new question. you follow CLO type up of securities? you seeing bought morning. of I returns some any you in Did to the think, about you just Or find week originations talk loan attractive? of buy I or this versus X securities kind out you're the securities most on Can

Brian Harris

Right.

on we're that been seeing I a either But to lack like kind importantly, might loans in discrimination deals, you of much while the know adding loan depending it. between of in think and know the deals, static more pool; We primarily time, we for owned we've on focused a managed how pool. you the in not transactions of that where we're pricing where have any and every

morning. all the we the we and was pooled things. it something And there know a deal focusing static performing as XXXX I fine. So on of and That the this have been end loans bought is we static are said,

high mean, new issue what I can't assets we So acquiring don't to it that could didn't as business I the the if so bonds, I buy I static is, securities market we those think in low lever we speak are speculate side the are because -- returns, them. teens, know. the XXs yielding to those on I But but

that got, we've haven't However, those. given we been the cash even levering pile

of a paying which debt we're expense notice secured So that disappeared. quite down we're our you'll has good and repo, has we not expensive, that to. need gone interest just unless we're leverage The we using because off -- part carry paying is

Stephen Laws

talk of environment, you ] whether to And what the billion normal is [ cash, or we then about X much liquidity when of cash operating Yes. -- on the touch think $X X of or how your much that is do you deploy? another of about incremental hold? power you deployed? What's think when -- would earnings expect liquidity money how Or of asked to all once way, that the liquidity you

Brian Harris

can I wonder I of And if think the X long normal day-to-day when million say can revolver extended as which, of I in which I with them of if -- say cash. in normal as that's time times. could And years liquidity. plenty imagine that XXXX million normal was back, our think, again, we've end think to that But -- see mentioned, we I carry another last all in ever would 'XX we've circumstances, we'll about we I the but were that it's $XX got lenders, powerful. for is as to far, I $XXX we go going would under Paul times,

depart in could, theory, cash. we in billion So with $X.X

that you in $X.X assets. If X:X, at leverage that's run even billion

billion it to unlevered X%, billion, X:X it's If assets you assets $X.X in X%. yielding with all run

earnings powerful that's So power.

Stephen Laws

you given conservative deployed? then move to And income will how thoughts up that that is retaxable like money something from around of dividend this on level? do seems a pretty lot standpoint, dividend there. Is It that. as payout the Or a upside at look need your

Brian Harris

will rather move down. next up We think be the than

being, nor capital here so is on to right dividend we planning right availability call. pressed accounting. any we're lot regulatory we of that reasons feel think policy reason us a now, I important do to for allows around that a exceed not I do don't things think our main REIT do we capital to are and want The will first, But wouldn't we do forecast that a dividend. that forecast However, now

of a think that later this to we as dividend the so investors And drives of as on that, is kind yields us hold can would higher we to where result opposed invest cash want now. market and the to at

for dividends most part, a cutting I think yes, are the in the who's about We them. like And space, raising the we're not cash. comfortable. lot around but who's pretty discussions having them, of

are we we we be another if case, won't probably then lower which end make. half. a discerning investments before an will have we'll and the of extraordinary We bond issue of forced hopeful being returns to what that and little amount first cautious we'll And now very, bit. our But right the on liquidity, very can deal very do even in we're

Operator

Next Steve with Delaney question, Citizens JMP.

Steven Delaney

this strong and take your to sort of ]. see rewarding Nice market the [ report choppy morning a

Just curious, balance opportunistically. you've talked about Brian, of kind sheet capacity lending the

to ahead a good thoughts profitability. bit, weak average there's Kind million try conduit to where expect to weak on in rate any more just little importantly, X your quarterly the of of in XXXX, but lot Just conduit market? X the over years? an waiting maybe next a lending out loan. for lending they'll getting hit are XX-year there about rate fixed to be then a CMBS owners $XXX loans basis, Obviously, floating view And and a involved? be a Ladder the about What's we should got property break XX-year of very

Brian Harris

has expect reminiscent very of and will up. up. It involved started. when It's picking to we do XXXX we Ladder be it Sure. pick been

a are that were rates had In spreads it's the very high when high. business volumes indicator. quite okay. set slow because low are spreads securitization this very, are you You very It's high, not situation, with spreads that

that what day, that's cost really at formula. the end and So of just of drives it's money, the the

on really going a that's between thing there's is right a other curve. differential the X-year The now XX-year little credit on and

wants so And to in mechanics [ years, you the the to start you a borrower tricky XXs. conduit running the for that XX a because But the years. wants in make when into X very lend loan sponsor, lender ] where business, B-piece X-year whereas gets yields borrow are

in the X if So over collect that's do to as believe win XX-year tension years category, XX. lower to X that right will want percent the and return going between the borrowers lenders X, on think the argument. I you're something XX-year. borrowers I opposed now a the XX-something want

will a now work insurance you evidenced I the pretty looking from as years is investors out having auctioned bigger taxes. out. I just a problem difficulty that sector are really with product the and stable category of XX off. And give even there's well ultimately, as Because multifamily, coming going in plenty The which see by on can through kind home, a a of the out that duration, And curve. intuitively XX-year door go think expenses right but should think you the for that is went lot largest of yesterday of It the comfortably. XX-year ever people the lot comfort in is roof

come 'XX, 'XX exactly, making rule out. or in, in XXXX, million we're I XXXX, that don't around a occurs. year I a I it and it's So always what does not back difficult it really how but but would right would conduit good a business. year $XXX defrost. market, it always before And looks the say is does this Back opportunity know over

than to going that a probably conversation year we're of of almost going this be second curve. to need the We a getting normalization think half more is started a the there I think I yield first of half the until year. but recently,

Steven Delaney

just in. add would Yes. And I

old of pay dividend, around increase dividend. you're think when man's But stock too. just you book need a also out to buyback view. you selectively. one anything permanent and the you're to lower, one permanent question, capital. Stephen's capital, not rid when mean, buy you're retiring person's your you the getting of That's I that, Obviously, -- I do using XX% or

Brian Harris

at Yes. if your that just little I to of kind think stock repurchases, you find history, back actually at if certain of Steve, in would you'll level. review they look also, And kick a do prescient. I say, pretty comment a our you be

Operator

Next question, KBW. Jade Rahmani with

Jade Rahmani

results on stand excess follow-up comments a and asset there's a called and of History. Sarah's Mortgage bust question in It's multifamily. a supply, was from Credit about Just creates some Risk: the boom Multifamily in that ease which reviewing there And class build it's to report and multifamily lower Lessons out. I vacancies.

there's expense pressure probably addition in noted, So rent, headwinds Sunbelt and dip new the I think occupancies in on lease also market. the you to will

you see Sunbelt can upcoming mean, qualify you be there? some happening think a pressure in of multifamily there when So for And a expectations. to low that rate I I comes will with deals, it refinance. exposure, lot framing just cap these of on what inevitably comment maturities

Brian Harris

Baby Robertson, part general. I'm Craig when the talking going I think, Boomers that of continue see the with the nearly think this. And ] I that a I you would highs tell to continue their all-time high, assume demographics mainly lot they values continue it's no even and home going stock and States. to Ladder But to is Boston, you're part the go And long [ United answer plumbing I as in mortgages to if as or rate low on age. because people the on quite you is The shortage Sunbelt to know York. have But New Philadelphia don't problems there think as as about -- they however, of market to of the if is long retire. to you'll I of are and actually They of moving people Sunbelt. as Sunbelt, -- just call say don't

But appears as The there doing, it stress, struggling as if they're one Sunbelt from has many assets goes, exposure at time far be management any, and with is too our that to it. okay. coming is

not seeing we And focused. it beginning And to achieved overbuilding we're has rents. bit. improvements are do principally many have in But requisite okay. close. supposed a Texas problems keep too. they're going Austin, those I also believe places, there in quite without If The cases, see want place rents And that You the made. to a operating even But overbuilt are to that to parts be not with few has some being the be, we're look expenses. Carolina North is them they're some rents awfully quite were of taken where

money So out door. a of the is advanced the lot future not going

And performing those so improvements. actually if the nearly without are achieved or achieved rents being

Sunbelt So you Craig, on to want I anything know, don't have our exposure share? particular do you

Unknown Executive

much mean, I that. No. add to hard to

on Sunbelt rents built really holding or either product I at points. think product leverage newly to We the up. tended when lower a we exposure, at lend look the are

and we have So the basis And the look how at our still examining generating. comfortable when we plans, at performing, them I in been business yields write when blips own through. them had it's at think very at by short-term assets are reevaluating the where possible them are and we we feel the properties sponsorship, that take to

largely where avoided of a the have I that that. portfolio, is the and So we focus right held up they occupancy think markets great some of and is example a the are Austin And stress. lot of exhibiting now has across

Jade Rahmani

soon underwriting? I assume properties Can you're So that implying or yields are just Austin at exposure. debt you little based on at the your that these there's to on be comment

Unknown Executive

XX% Right business those in high multi We with plans as our Yes. to debt continue a going see ongoing. still portfolio occupancy they now, lease. up yield the shows Xs at

and expense we're current at said, mid-XXs mid-Xs and those the turns very depending with we I and it pro in comfortable with, see current even plus with asset. As normalizing in the on And rents, going. we're levels that forma when forward, occupancy lease-up levels we

Jade Rahmani

And basis? on yield debt that's a

Unknown Executive

basis, debt yes. yield a on That's

Jade Rahmani

Okay.

-- that equity, So wouldn't much could that the it? present leave for debt yields don't room. those Those lease challenges I mean,

Brian Harris

Yes, yes. are less on There X.X would calculations ago, years were be rosy purchased -- they the than equity that for were years ago to X.X sure. X properties

Unknown Executive

And in that's -- the in manifesting returns been our there been when has been has have the pain payoffs. Experience are still completed. highlighted and equity, business been the funds positive

Jade Rahmani

Okay.

yield, So do as for just a loan comes maturity? X% X.X% think say, a debt let's situation gets pressure. or that What inflation when up property allowing some to case, you happens base the a in

Brian Harris

comfortable. X.X own an pay bring to just bit, their it I they possibly what is. that not is it's fact. the market, to more seeing If in fault. but estate and us it to would they a restoring we'll years see reserves down than is if ROEs is a which debt try other mean, sponsor and our ago. than today little we lender debt where even a expensive the down don't, required purchase additional That's was accomplish mezzanine reload and the real want layer it's to through place pay not fault, We a everything are the to then cap But to it It equity. of the expect if

title foreclosed And where in this overly we're is And to for which is with property not nothing like, a multifamily and we took we brand with it. mostly wrong new. Pittsburgh, instance, There and property. own concerned

can we Freddie we're to now. Mac right fact, take In considering if it

didn't most is this say, money the feel or either pain put is way do years we was ROE X.X the into sponsor deciding, first the core in it as ROE it really what more just we comments, though so so are earlier this? capital Or continue we sponsors seeing my to? on not we're said -- out the prior the And of even from have to However, experiencing calculation while let's feeding did did to not not I side. his now wanted the that. a pan and the equity worth But far chase do

mentioned, we -- take do we Pamela pride in losses. calling as And great not default

we seeing far, you're side. all of most is is And occurring. -- we loss evidence it. really not equity as the existing that so of I the all said, of believe But through pain we're on so the almost it, we started construction off and in X.X brand-new around loans. time coming we with right when X, loans properties Ladder was out, be fees caps. fixed-rate XXXX X-year seeing the switched Capital where doing to and properties fees attracted extraordinarily That purchased leveraged was And but pain have at

a that, they're right that and brand we're dealing of And result are We're doing fixed so with dealing [ seating new. maturing that's loans just fine the are with rate that ] as now.

down borrower if pay it. it so would it, refinance work But it to figure just performing they're had is calculation be. or them has I that But extend happy think to -- and to out not ROE And the on the still fine. we're how with hoped what they

Pamela McCormack

The only want I add... thing to

Unknown Executive

the we're talked well. the seeing Refis can that mid-Xs. at available assets the and There's are we the about also in days and as sponsor sell prep

Pamela McCormack

wanted our is XX% were year, in I of payoffs to The only thing add this multifamily. in

your when invested the in agree comment, So with asset. widely it's a not sponsors you're caveat that seeing but especially and [indiscernible], asset they're syndicated

event. pay basis them We we're any seeing said, are defend. are off we as And our actually this opportunity. I could comfortable of some think them seeing in Brian at and lead And to

Operator

question with Howlett Matthew Instructions] Securities. from [Operator Next B. comes Riley

Matthew Howlett

credit. the your Just stock at even But a well. every the It's theme And $X estate, saying and portfolio holding follow-up losses the the day lenders. on interest real the on commercial I prices, at then around managing sector in rates. office up the look look they're [indiscernible] and headlines is higher trillion fear for

need and down some are this rates we Do are and a holding mean, crisis Brian, to the few for back. come of I properties now. not about work this going on very still I suggesting? the headlines out taken all to see see -- talked rates disconnect? down, you for sponsors the mean, while really to just come that cap You've what's defaults

Brian Harris

I actually don't it. that's think

D.C. There's element what to cities some a -- other than something larger a It's with out exodus and struggling particular, taking lending cities. around you're place in people centers. states. of are high And moving there to taking a gateway be certain Washington, those of seeing, interest these people I There's a headlines media rates. took wealth situation down some And in was that There cities place. tax Northeast in cities focused large lot the is tend of a criminal and place work-from-home the component of that. think of where Sunbelts. are

to like those be So But painful. market is fixable. be and going the are It's that's straightened out. they can't resetting not

So the loans. have we at think, I that large disconnect, loans. We is Ladder some have do smaller

And X caution in Miami belief $XXX over they good million are and And ultimately, trade. And them back. -- Aventura. of couple would new loans not lot -- nonrecourse good seeing will we or institutions a actually best a high large and part thought properties or But economic of feel is are X the the have in office these would give degree of a animals, buildings of market them them lack they're of just It's handing people find that probably United loans they the We reset, We States. are there. a X are never back. level. those it a and of

competing selling other I lenders. where pressure, mean taken -- accused And going with at estate think look and don't in ever start deep banks that's place. at really will too. little lending real if you think be the have has of seeing mortgages to I more you Ladder I a the to commercial competitive add discounts, markets very But most

felt to Los and pandemic workforce and St. and in Louis, stay to we stay smaller out the actually the we Houston stay move that York. prefer populations, fact, people than would allow rather in always flyover states which New In or broaden Memphis Angeles in

think that the there disconnect So is one. if is I

And still having difference pressure But was a items, from said really big not we're gone. that, Friday work all the talking home there's because already on of it. about

it's everyone They that the is do are at are jobs. are the certain So is X But closing a They what a under lot like government back days their lot a city, because of an federal emergency X protocol. cities, office, McDonald's not anything to is not seeing X the companies not and home. now. with We're operating D.C. and where problem just week Starbucks go and code go days week. real places wrong Washington, a still people of at the staying in to there's

been. at have should that situation that it's -- not caps think. time reasons a up was think as people If So think. start don't when bad were probably more nearly them a quickly. they And X as we one they looking we're the probably as of lot hold The apartments problem apartment at at caps, the also financing of with situation people very people X than normalizes apartment the will

Matthew Howlett

Absolutely.

going So crisis it fuel to 'XX? opportunity more sound -- retreat view Bancorp, of do And you to to how Brian, [indiscernible] Community happening assets, more do Ladder? down? sell I from like a it's lending, an I -- doesn't York you for you mean, mean, this and do is you as New going feel what's mean, do with 'XX, banks I it these go banks think have if the like

Brian Harris

have that. solution Because was I information But to I have you I there. York have I Bank nor think Bank. of on inside out. do there's part New around something offer on going -- figured a layman's Community really it no opinion the Signature

in So assets you they at to look have to taking took and Signature participate assume them. before allowed them deposits from a Bank, FDIC the

And so year healthy been must less a than they ago. have

So what happened?

York. co-op that Now leverage. New discussion nearly is caused big loan was do, if usually they me loans about they it's the some XX%, rarely XX% was of do have large money, and there co-op loans a loans inconceivable one and the borrow how because That in headache to

with lot -- some struggle But that. probably be So office rent-controlled but sheet to disconnect and they loans a a a big too do of on I for loans probably have little there. -- are balance have There that their they so and seems them.

when about started Something portfolio. they their looking later happened at

defaults this isn't Valley their know they This as about Bank up do have view And having to that imagine didn't if I I But I whole they Silicon one, and them. different. idiosyncratic that is in goes assets sell them. and This flames. I something have XX-year Bank they some capital the do rather think Signature mark to can't book

the apartments, don't going problematic point high to think I losses with think be out given though. some I to some of have lenders be rent-stabilized of of those problematic. are be place think them in they're do there, concentrations like to However, and I that apartments changes putting cities, these of taken do there'll rent-controlled the going business.

past, yes, opportunity not we've bought loans I in good I goes, in the this pretty don't York mean, lender New And actually what Bank as I of. far from from know. as Community know round. They're

bad aggressive going trouble all. have loans Signature, to And York, if wanted want but be sell And my for to office a in sell New to loans from little so wouldn't more less little them. is they're not comfortable which But was a bit we them us. might they buying suspicion at any

Matthew Howlett

residential Yes, this you side in at the on I of know stuff. the year. they're deal out now Last least half question, other with and packages into first run bond

feel debt it? you've the at you've now, like it the have to the would balance sheet. way You've been a tip exactly more debt? Or Would you've deal? do way or masterful you keep an to structured be structure you Just of fixed go the curious, in CLO a rate little got rate want you want how towards you floating X about unsecured done talking the a you bit end [ ],

Brian Harris

CLO the be originating one, would don't deal going loans. start think I I more until is see we comment new out a first no,

We have always a we out new do they'll far because a we'd have now. their maturity XXXX outstanding be But managed so right soon. coming a we've as out They're which hopefully of rate due, the longest start as inside than come to X fixed off would just rather paying years there longer will got. like X and than take term more issue, periods unsecured, that down

we're REITs much disconnect a a mortgage going lend got, the frankly now so it's invest expensive, people little cheap. to given to But right want bit liquidity unless borrow of it's there. to in money there's And money situation because who and we've not

see There a What's did day that did signs mortgage issue $X attractive of we terms. there. the other REIT at it life pretty -- some billion that? was unsecured However,

Matthew Howlett

X%, correct? looking one. same over the Just We're at

Brian Harris

Yes. Yes, that's right.

tightened But was. about name top company Cooper. think Mr. the that the I was where of -- and the from XX

that in And debt. like if get involved I'd in to So we been issue corporate supply there unsecured lack that, and can a has real more of market.

starts where very and dashed noise X-year However, get we again, York I spreads, more But this has little then. well a around curve if normalized, the while. out as getting falls bit Bank pop rates -- that recent yield New for the go probably might little we in Community towards do a yes, think

to We at. at lend rates have able it to we're be money than higher borrowing

Operator

the Brian to I for would to now turn over call like remarks. closing Harris

Brian Harris

we ending the Ladder. contributing difficulties periods successful year, appreciate do quarter. And you those hit difficult all of to will stressful and our we're our time, well was And It we bondholders, products lot there. be point that or July, think year, hoping investors, from but year going things staying We June tend Long employees, a in to a about you most future earnings time. our are each the of Thank to are at here. around to where better very to optimistic a and with then us. our be of are we

you thank all, the end first So of we'll and the at you quarter. see

Operator

This concludes today's teleconference.

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

Ladder Capital (LADR) 8 Feb 242023 Q4 Earnings call transcript