Ladder Capital Corp (LADR) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call summary shows strong financial performance with high loan originations, solid earnings, and a significant share repurchase program. The Q&A session did not reveal major concerns, and management's focus on stable investments and expected growth in net interest income and loan portfolio are positive indicators. The market cap of $1.44 billion suggests a moderate reaction, leading to a predicted stock price increase of 2% to 8% over the next two weeks.
Key Financial Performance
Distributable Earnings (Q4 2025) $21.4 million or $0.17 per share. Adjusted for a $5 million realized loan loss, earnings were $26.4 million or $0.21 per share. The adjustment reflects a previously reserved loan loss.
Distributable Earnings (Full Year 2025) $109.9 million, delivering a 7.1% return on equity. This reflects a year of solid performance and financial strength.
Loan Portfolio (Year-End 2025) $2.2 billion, representing 42% of total assets. Weighted average yield was 7.8%. Office loan exposure declined from 14% to 11% of total assets.
New Loan Originations (2025) $1.4 billion, the highest annual volume since 2021. Nearly $950 million originated in the second half of the year, with $433 million in Q4.
Securities Portfolio (Year-End 2025) $2.1 billion, representing 39% of total assets. Weighted average yield was 5.3%. 99% of the portfolio was investment-grade rated, and 97% was AAA rated.
Real Estate Portfolio (2025) $966 million, generating $14.8 million of net operating income in Q4 and $57.3 million for the full year. Performance supported by active leasing and asset management.
Liquidity (Year-End 2025) $608 million, including $570 million of undrawn capacity on the unsecured revolver. 81% of assets were unencumbered.
Adjusted Leverage Ratio (Year-End 2025) 2.0x, reflecting conservative leverage and financial discipline.
Stock Repurchase (2025) $10.2 million of common stock repurchased, totaling 965,000 shares at an average price of $10.60 per share.
Dividend Coverage (2025) 96% excluding the loan write-off. Dividend declared was $0.23 per share in Q4, reflecting balance sheet strength.
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Operating Highlights
New Loan Originations: In 2025, Ladder originated $1.4 billion in new loans, the highest annual volume since 2021. The second half of the year saw nearly $950 million in new loan originations, marking the best 2-quarter performance in over 3 years. In Q4 alone, $870 million in new investments were made, including $430 million in new loans.
Securities Portfolio Expansion: Acquired $413 million of primarily AAA-rated commercial real estate securities in Q4 2025. The securities portfolio totaled $2.1 billion by year-end, representing 39% of total assets.
Real Estate Investments: Made a $25.8 million equity investment for a 20% noncontrolling interest in a Manhattan office property near Grand Central Terminal.
Investment-Grade Status: Achieved investment-grade ratings from Moody's and Fitch in 2025, with S&P upgrading Ladder to BB+ in January 2026. This enhanced access to stable capital markets and reduced the cost of funds.
Unsecured Capital Structure: Issued a $500 million investment-grade unsecured bond at a fixed rate of 5.5% in 2025. The bond was oversubscribed by 5.5x, and its spread tightened significantly in the secondary market.
Loan Portfolio Performance: Loan portfolio totaled $2.2 billion at year-end 2025, with a weighted average yield of 7.8%. Office loan exposure reduced from 14% to 11% of total assets.
Liquidity and Leverage: Maintained $608 million in liquidity, including $570 million of undrawn revolver capacity. Adjusted leverage ratio was 2.0x, and 81% of assets were unencumbered.
Focus on Loan Growth: Shifted focus to growing the loan portfolio and earnings in 2026, with $250 million in new loans already closed and $450 million under application.
Dividend Stability: Achieved 96% dividend coverage in 2025, reflecting strong balance sheet and earnings growth potential.
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Risk or Challenges
Loan Losses: The company experienced a $5 million realized loan loss in the fourth quarter of 2025, which had previously been reserved for. Additionally, 4 loans totaling $129.7 million (2.5% of total assets) were on nonaccrual status, including one loan collateralized by an office property in Portland, Oregon. A $61 million nonaccrual loan was resolved through foreclosure after year-end.
Office Loan Exposure: While office loan exposure declined from 14% to 11% of total assets, the company still made new investments in office properties, which could pose risks given ongoing challenges in the office real estate sector.
Macroeconomic Shifts: The company acknowledged ongoing macroeconomic shifts in the U.S. and global economy, which could impact its loan portfolio and overall financial performance.
Loan Payoffs: The company faced significant loan payoffs in 2024 ($1.7 billion) and 2025 ($608 million), which offset asset growth and could challenge future earnings growth.
Nonaccrual Loans: The company had 4 loans on nonaccrual status, representing 2.5% of total assets, which could impact financial stability and earnings.
Concentration in AAA Securities: The securities portfolio is heavily concentrated in AAA-rated securities, which, while high credit quality, may limit returns in a rising interest rate environment.
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Guidance & Outlook
Loan Origination Growth: The company plans to increase loan originations in 2026, with a focus on enhancing returns, supporting dividend growth, and creating shareholder value. Over $250 million in new loans have already been closed in early 2026, with more than $450 million under application and in closing.
Capital Structure and Liquidity: Ladder Capital aims to maintain a predominantly unsecured capital structure, with 71% of debt unsecured and 81% of assets unencumbered as of year-end 2025. The company has $608 million in liquidity, including $570 million of undrawn capacity on its unsecured revolver. The focus is on reducing the cost of capital and aligning valuation with equity REIT peers.
Securities Portfolio Strategy: The company expects robust paydowns in its securities portfolio and plans to reallocate proceeds into loan originations. The portfolio, valued at $2.1 billion as of year-end 2025, is primarily AAA-rated and unencumbered, providing additional liquidity for growth.
Market Trends and Lending Opportunities: Ladder Capital anticipates rising stock prices and improved liquidity in commercial real estate markets in 2026, creating lending opportunities. The company is positioned to capitalize on these trends with a diversified investment mix and a focus on credit quality.
Earnings Growth and Dividend Stability: The company aims to grow earnings and book value over time by expanding its loan portfolio. Dividend stability is expected, with potential for dividend yield to tighten relative to other investment-grade REITs.
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Shareholder Return Plan
Dividend Declaration: In the fourth quarter, Ladder declared a $0.23 per share dividend, which was paid on January 15, 2026.
Dividend Coverage: For the full year, Ladder achieved 96% dividend coverage, excluding the loan write-off.
Dividend Stability: The dividend remains stable, reflecting the strength of the balance sheet and the ability to grow earnings.
Future Dividend Potential: As the investment-grade story gains traction, there is potential for the dividend yield to tighten relative to other investment-grade REITs.
Share Repurchase in Q4 2025: Repurchased $928,000 of common stock or 88,000 shares at a weighted average share price of $10.57.
Total Share Repurchase in 2025: Repurchased $10.2 million of common stock or 965,000 shares at a weighted average share price of $10.60.
Remaining Share Repurchase Program: As of December 31, 2025, $90.6 million remains outstanding on Ladder's stock repurchase program.
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Key Q&A
Q:Is Ladder planning to do anything different in light of the potential volatility in 2026?
A:Brian Harris stated that Ladder is not planning to do anything differently despite the volatility. He mentioned that the company is not overly impacted by the tightening of CRE loan spreads or the volatility in interest rates. Ladder remains focused on safe dividend-based investments in real estate rather than technology-driven assets like data centers.
Q:What ROE does Ladder think is achievable within the current capital structure, and what are the plans for the loan and real estate equity portfolios?
A:Brian Harris mentioned that Ladder plans to grow the real estate equity portfolio selectively and expects the loan portfolio to reach over $6 billion by year-end. He estimated an ROE of 9%, which could go higher depending on the resurgence of the conduit market and potential one-time gains from real estate investments.
Q:Why did net interest income tick down quarter-over-quarter, and what is the outlook?
A:Brian Harris explained that the dip in net interest income was due to loans being funded at the end of December, which delayed the realization of interest income. Additionally, payoffs of older loans with higher rates contributed to the decline. However, he expects net interest income to pick up in the first quarter of 2026 as new loans with higher yields are funded.
Q:What were the biggest mistakes in underwriting bridge loans, and how will Ladder ensure better discipline moving forward?
A:Brian Harris attributed past losses in bridge loans to low cap rates, rapidly rising interest rates, and the work-from-home phenomenon. He emphasized avoiding refinancing competitors' bridge loans and being cautious with large cities with unionized workforces. Ladder plans to focus on stable population centers and avoid high-leverage loans to maintain discipline.
Q:What is the competitive landscape for lending in 2026, particularly with regional banks?
A:Brian Harris noted that regional banks are becoming more competitive, especially in construction loans. However, Ladder focuses on refinancing newer properties and loans in the $80-$100 million range, which are less competitive. He also mentioned that the conduit business remains soft but expects it to recover as cash flows stabilize.
Q:Review of Unclear Management Responses
A:Management avoided directly addressing the specific impact of AI and data center investments on Ladder's strategy, instead focusing on general market trends and opportunities in real estate. Additionally, while discussing the competitive landscape, Brian Harris provided a broad overview but did not offer detailed insights into how Ladder plans to counteract increased competition from regional banks.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
SP
access
activity
bond market
bondholder
capacity
capital structure
carrying value
commitment
credit quality
detail
end loan
end security
exposure
facility
foot
funding
grade bond
grade mortgage
investor
ladder
loan carrying
loan loss
loan office
loss share
momentum
mortgage REITs
office property
point treasury
positioning
price stock
proposition
rating Moody
reserve level
share loan
share price
shareholder value
sheet ability
spread
story
LADR Transcript
Ladder Capital Corp (LADR) Q4 2025 Earnings Call Transcript
Positive2-5
The earnings call summary shows strong financial performance with high loan originations, solid earnings, and a significant share repurchase program. The Q&A session did not reveal major concerns, and management's focus on stable investments and expected growth in net interest income and loan portfolio are positive indicators. The market cap of $1.44 billion suggests a moderate reaction, leading to a predicted stock price increase of 2% to 8% over the next two weeks.
Ladder Capital Corp (LADR) Q3 2025 Earnings Call Transcript
Positive10-23
The earnings call highlights strong financial performance, including high loan origination and a strategic shift towards investment-grade assets. The Q&A reveals plans for further portfolio growth and improved ROE, with management addressing analyst concerns positively. The share repurchase program and increased liquidity support a positive outlook. The market cap suggests a moderate reaction, leading to a positive prediction.
Ladder Capital Corp (LADR) Q2 2025 Earnings Call Transcript
Positive7-24
The earnings call reflects a positive outlook, with strong liquidity, strategic loan origination, and a positive impact from achieving an investment-grade rating. The Q&A section supports this view, highlighting a shift towards unsecured debt and a focus on profitable conduit business. The stock repurchase and consistent dividend further bolster investor confidence. Despite some concerns about loan closing delays, the overall sentiment is positive, suggesting a likely stock price increase in the short term.
Ladder Capital Corp (LADR) Q1 2025 Earnings Call Transcript
Positive4-24
The earnings call summary and Q&A session reveal strong financial performance, including a robust liquidity position, strategic loan origination, and a commitment to shareholder returns through dividends and stock buybacks. Despite some market uncertainties and vague management responses, the company's proactive approach to capitalizing on market opportunities and maintaining liquidity is promising. The market cap suggests a moderate reaction, leading to a positive stock price movement prediction of 2% to 8% over the next two weeks.
LADR Slides
LADR Report
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