Yahoo Finance Ladder Capital Corp (LADR) Q1 2024 Earnings Call Transcript Highlights: Strong Financial ...
Distributable Earnings: $42.3 million
Earnings Per Share (EPS): $0.33
Return on Equity: 10.8%
Cash and Cash Equivalents: $1.2 billion as of March 31, 2024
Total Liquidity: Increased to over $1.5 billion from $950 million last year
Adjusted Leverage: Reduced to 1.5 times from 1.8 times a year ago
Loan Payoffs: $400 million in Q1, including 15 balance sheet loans totaling $320 million
Balance Sheet Loan Portfolio: $2.8 billion with a weighted average yield of 9.42%
Securities Portfolio: $467 million, primarily consisting of triple-A securities with an unlevered yield of 6.84%
Real Estate Portfolio: $963 million, mainly net lease properties, contributing $14.1 million in net rental income in Q1
Dividend: Declared a $0.23 per share dividend, paid on April 15, 2024
Release Date: April 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Could you provide more details on the types of deals Ladder Capital is currently looking at in the market, particularly regarding asset classes and pricing? A: Brian Harris, CEO of Ladder Capital, noted a slight increase in originations but described the market as challenging due to rising rates and widening spreads. He estimated a potential volume of $400 million for securitizable instruments in 2024, emphasizing the market's condition rather than Ladder's capabilities. Adam Siper, Head of Origination, added that despite a slowdown, there are still refinancing needs and industrial acquisitions, particularly benefiting from the pullback of banks.
: Given the recent inflation trends and interest rate increases, what are Ladder's expectations for foreclosures in the multifamily or office asset classes? A: Brian Harris projected an increase in foreclosures, particularly influenced by investments made during late 2021 to early 2022. He discussed the challenges faced by properties requiring rehabilitation due to rising costs and emphasized the strategic shift to newer properties to mitigate such risks.
Q: Can you discuss any investment opportunities Ladder is exploring outside of newly originated loans and securities investments? A: Brian Harris expressed interest in potentially attractive equity opportunities in properties sold at significant discounts from their purchase prices a few years ago. He hinted at the possibility of acquiring one or two office buildings by the year's end, emphasizing the attractiveness of these opportunities compared to traditional investments like CLO triple-As.
Q: How is Ladder managing its substantial liquidity position, and what impact could deploying this excess liquidity have on earnings? A: Brian Harris discussed the strategic management of Ladder's liquidity, highlighting the potential to increase leverage comfortably from 1.5 times to around 2.5 times. He suggested that deploying excess liquidity could significantly ramp up earnings, especially if invested in high-return opportunities.
Q: What are the current challenges and outlook for Ladder's conduit business, and how does it compare to balance sheet originations? A: Brian Harris explained that while the balance sheet side of the business might be larger, it's more due to market conditions than preference. He noted that the inverted yield curve poses challenges for the conduit business, but a steeper curve could enhance opportunities in this area.
Q: With the commercial real estate cycle potentially at a bottom, how should we view the management of Ladder's General CECL Reserve moving forward? A: Brian Harris indicated that while the worst may be over, the commercial real estate market could still worsen, albeit at a slower pace. He suggested that the CECL reserve might see a slight increase in the next quarter but didn't anticipate significant additions, reflecting a cautious but stabilizing outlook.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
