Ladder Capital Corp (LADR) 2025 Q4 法說會逐字稿

Good morning and welcome to Ladder Capital Corp's earnings call for the fourth quarter of 2025. As a reminder, today's call is being recorded. This morning, Ladder released its financial results for the quarter and the year ended December 30, 2025.

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 or important factors that could cause actual results to differ materially from these statements and projections.

We do not undertake any obligation to update our forward-looking statements or projections unless required by law. In addition, Ladder will discuss certain non-GAAP financial measures on this call which management believes are relevant to the assessing of company's financial performance.

Company's presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP.

These measures are reconciled to GAAP figures in our earnings supplement presentation, which is available in the investor relations section of our website. We also refer you to our Form 10-k and earnings supplement presentation for definitions of certain metrics which we may cite on today's call.

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

Good morning and thank you for joining us today. I'm pleased to report Ladder Capital's fourth quarter and year-end results for 2025. This past year marked a significant milestone for our company.

We became the only investment grade rated commercial mortgage rate, underscoring our strong balance sheet management and conservative approach to leverage. Our robust positioning enables us to enter 2026 with a dedicated focus on driving earnings growth.

Earnings and financial strength. During the fourth quarter, Ladder generated distributable earnings of $21.4 million or $0.17 per share. Adjusting for a $5 million real loan loss that had previously been reserved for, the fourth quarter earnings were $26.4 million or $0.21 per share.

For the full year, Ladder generated distributable earnings of $109.9 million delivering a 7.1% return on equity. With adjusted leverage at a modest 2.0 times, stable book value, and robust liquidity, these results reflect a solid year of solid performance and financial strength.

Positioning for long-term growth. Achieving investment grade status in 2025 with ratings from Moody's and Fitch significantly enhanced Ladder's access to deeper and more stable capital markets. This achievement lowered our cost of funds and strengthened our liquidity profile.

Building on this momentum, we were pleased to see S&P upgrade ladder to double B+, just one grade. Our $850 million unsecured revolving credit facility remains a cornerstone of our funding strategy, complementing our unsecured bond issuances by providing same-day liquidity at a highly competitive rate.

This facility includes an accordion feature that allows for expansion up to $1.25 billion. We are pleased to share that we recently secured $400 million of additional commitments to exercise the accordion, with closing anticipated later in the quarter.

Together these funding sources enable Ladder to maintain a predominantly unsecured capital structure operating independently of repo and CLO markets and position us to capitalize on future opportunities with confidence.

Investment and loan portfolio activity. In 2025 we originated $1.4 billion in new loans, our highest annual volume since 2021. The second half of the year was particularly strong, with nearly $950 million in new loan originations representing our best two quarter performance in over three years.

During the fourth quarter alone, we made over $870 million in new investments, including over $400 million in securities, a $25.8 million dollar equity investment, and more than $430 million in new loans at a weighted average spread of 340 basis points.

At year end, our loan portfolio totals $2.2 billion representing 42% of total assets. Our investment strategy remains focused on stable income producing collateral, primarily multi-family and industrial properties with no drift on credit quality.

Notably, office loan exposure declined from 14% to 11% of total assets by year end. While we have reduced overall office exposure, we've selectively pursued new investments as capital returns to the sector. In 2025, we made three new loans totaling $68 million collateralized by recently acquired office properties.

Additionally, and as previously mentioned, we made a $25.8 million investment for a 20% non-controlling interest alongside a strong operating partner to acquire a 667,000 square foot Manhattan office property located just less than one block away from Grand Central Terminal.

Momentum has carried into 2026 as acquisition activity improves in the commercial real estate market. We've already closed over $250 million in new loans with more than $450 million under application and in closing.

Securities portfolio. During the fourth quarter, we acquired $413 million of primarily AAA rated commercial real estate securities. As of year-end, the securities portfolio totaled $2.1 billion representing 39% of total assets.

Real estate portfolio. Our $966 million real estate portfolio delivered consistent performance in 2025, generating $14.8 million of net operating income in the fourth quarter and $57.3 million for the full year.

His steady income was supported by active leasing and proactive asset management, which improved both occupancy and overall portfolio stability throughout the year.

Capital structure and liquidity. In 2025 we issued our inaugural $500 million investment grade unsecured bond at a fixed rate of 5.5%. With pricing tightening from 200 basis points over treasury to 167 basis points at issuance.

Since then, our bonds have tightened by over 60 basis points to approximately 100 basis points over treasuries, outpacing comparably rated equity REIT bonds by nearly 2 times and distinguishing us from higher leverage mortgage rates and property rates with first loss exposure.

Historically, commercial mortgage rates faced skepticism from bondholders and shareholders of traditional equity REITs due to concerns over leverage composition, external management, and limited insider ownership.

Ladder stands apart. We offer a differentiated investment proposition, an investment grade internally managed company with management and the board owning over 11% of the public company, a portfolio comprised of senior secured assets, and a capital structure anchored by unsecured debt with conservative leverage of 2 to 3 times.

As of year-end, 71% of our debt was unsecured and 81% of our assets were unencumbered. We maintain $608 million in liquidity, including $570 million of undrawn capacity in our unsecured revolver.

Having now converted traditional equity bondholders, we believe we offer a meaningful alternative to traditional equity shareholders as well by providing a clear and compelling value proposition for investors seeking stability, alignment, and attractive risk adjusted returns.

Building on our momentum, our focus now shifts to loan origination and earnings growth as the primary catalyst driving our story forward. With this stronger narrative, we aim to attract high-quality equity shareholders, aligning our valuation with equity peers to further reduce our cost of capital.

In closing, 2025 was a landmark year for Ladder. We achieved investment grade ratings, enhanced our capital structure, and delivered consistent performance across our portfolio.

In 2026, we plan to drive growth by increasing loan originations to enhance returns, support dividend growth, and create shareholder value, all while maintaining the balance sheet discipline that defines Ladder.

Thank you to our investors for your continued support and to our team for their dedication throughout this transformative year. With that, I'll turn the call over to Paul.

Good morning and thank you, Pamela. Expanding on the topics Pamela highlighted, I'll be providing additional detail on our operating performance and strategic positioning as 2026 begins.

During the fourth quarter, Ladder generated distributable earnings of $21.4 million or $0.17 per share. Excluding a realized low loss previously reserved for our fourth quarter earnings were $0.21 per share.

In 2025 we achieved our long standing goal of attaining investment grade credit ratings as Moody's upgraded Ladder to BAA3 and Fitch to BBB-. With S&P upgrading the ladder to BB+ in January subsequent to year end.

Ladder is now the only investment grade rated mortgage rate, a distinction that underscores our disciplined approach to balance sheet and credit management, prudent leverage, and the durability of our diversified commercial real estate platform.

These ratings enhance our access to investment grade capital at tighter spreads, validate our commitment to the use of unsecured debt to finance our balance sheet, and overall further solidify Ladder's industry leadership.

In July of 2025, we issued $500 million of senior unsecured notes maturing in [2030] with a 5.5% coupon representing a 167 basis point spread over the benchmark treasury. This transaction was oversubscribed by more than 5.5 times with orders exceeding $3.5 billion executing at the tightest spread in Ladder's history.

This transaction firmly established Ladder in the investment grade bond market, expanding our access to a deeper, more stable pool of capital. As Pamela mentioned, but is worth repeating, the bond has continued to perform well in the secondary market, trading as tight as 100 basis points over treasury since closing.

As of year-end, our adjusted leverage ratio was 2.0 times, and we maintained a robust liquidity of $608 million including $570 million of revolver capacity. Our unencumbered asset pool represented 81% of total assets as of December 30, 2025.

Of which 87% was comprised of first mortgage loans, investment grade securities, and unrestricted cash and cash equivalents, providing a significant balance sheet flexibility. As of December 30, 2025, Ladder's unappreciated book value per share was $13.69.

Which is net of $0.37 per share of CECL reserve established. In the fourth quarter of 2025, we repurchase $928,000 of common stock or 88,000 shares. At a weighted average share price of $10.57 and in total in 2025 we purchased $10.2 million of common stock or 965,000 shares at a weighted average share price of $10.60.

As of December 30, 2025 $90.6 million remains outstanding on a Ladder stock repurchase program. In the fourth quarter, Ladder declared a $0.23 per share dividend, which was paid on January 15, 2026.

For the full year we achieved 96% dividend coverage excluding the loan write-off while simultaneously allowing our loan portfolio to grow following a record year of paydowns in 2024.

Our dividend remains stable, reflecting the strength of our balance sheet and our ability to grow earnings as our asset-based transitions into newly originated loans and reaches full capacity.

Furthermore, as our investment grade story continues to gain traction, we see potential for our dividend yield to tighten relative to other investment grade REITs with comparable credit ratings, further underscoring the value of our differentiated model.

Building on Pamela's overview of our performance, I will highlight a few additional insights into how each of our segments fared for the fourth quarter. As of December 30, 2025, our loan portfolio totaled $2.2 billion with a weighted average yield of 7.8%.

As of year-end, four loans totaling $129.7 million or 2.5% of total assets were on non-accrual. Including one loan added in the fourth quarter collateralized by an office property in Portland, Oregon, the Weatherly Building.

The loan has a carrying value of $5.8 million or $88 per square foot, which is net of a $5 million loan loss reserve realized in the fourth quarter. Subsequent to year end, we resolved one non-accrual loan with a $61 million carrying value through foreclosure.

The loan is collateralized by a three property, 158 unit multi-family portfolio in the Harlem neighborhood of New York City with 60 parking spaces built between 2017 and 2020. The properties are currently 87% occupied and generate healthy net operating income.

Our CECL reserve otherwise remains steady at $47 million or $0.37 per share. Taking into consideration the continued ongoing macroeconomic shifts in the US and global economy, we believe this reserve level is sufficient to cover any potential losses in our loan portfolio.

Ladder CECL reserve level has been and we believe will continue to be the result of a disciplined approach to credit risk management, allowing us to remain well positioned to navigate market challenges while protecting shareholder value.

As of December 30, 2025, our securities portfolio totaled $2.1 billion with a weighted average yield of 5.3%. Notably, 99% of the portfolio was investment grade rated and 97% was AAA rated, underscoring its high credit quality.

As of year-end, approximately 66% or $1.4 billion of our securities portfolio remains unencumbered, providing an additional source of liquidity for the Ladder, complementing our same-day liquidity of $608 million and reinforcing our strong balance sheet and ability to focus on offense.

In 2025, our $966 million real estate segment continued to generate stable net operating income. The portfolio includes 149 net lease properties comprised of primarily investment grade credits committed to long-term leases with average with an average lease term of 6.7 years.

For further details of our fourth quarter and full year 2025 operating results, please refer to our earnings supplement presentation available on our website and our annual report on Form 10-k which we expect to file in the coming days.

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

Thanks, Paul. 2025 was a pivotal year for us, and we reaffirmed our commitment to an unsecured liability structure after upsizing our revolver and issuing our first investment grade bond. With predominantly unsecured debt now at attractive borrowing costs, we expect 2026 to be a year where we complete our business plan to grow our loan portfolio along with our earnings.

We've already begun to grow our asset base, increasing it by 16% in the second half of 2025 and 10% in the fourth quarter. Our growth in assets has been partially offset by large payoffs in our loan portfolio over the last two years, with $1.7 billion in payoffs in 2024 and $608 million in 2025.

But I would note that in the fourth quarter of 2025, we received only $107 million in payoffs, our lowest quarterly total in the last two years. With payoffs slowing, our accelerating loan originations become more visible as growth in our loan book takes center stage.

We originated $511 million in new loans in the third quarter and $433 million in the fourth quarter, with an additional $251 million originated in January of 2026. This totals $1.2 billion of new loan originations over the last seven months.

Turning to our securities portfolio, in 2025, we successfully reallocated capital from T-bills into AAA securities, increasing our holdings by over 90% to $2.1 billion despite taking in $535 million in paydowns.

We expect our securities portfolio to continue to experience robust paydowns as capital markets have become more constructive around refinancing commercial mortgage loans and issuers exercise cleanup calls due to deleveraging of AAA classes. This is the class we have a preference for as seen in our holdings.

We expect to use the proceeds from these paydowns in our securities book combined with the sales of securities and our access to unsecured capital to provide much of the liquidity needed to fund our growing loan origination pipeline.

This plan is not new. It is simply an illustration of the business plan we outlined last year. We believe it was critical to prepare the company's liability complex for the loan growth we've been expecting, and we're now seeing this play out in real time.

While we will always be on the lookout for opportunities to improve our cost of funds, we believe most of our efforts in the year ahead will be focused on growth in our loan portfolio and by extension, earnings.

We think we are well positioned to take advantage of the lending opportunities we see emerging. Rising stock prices and a more balanced liquidity picture in commercial real estate markets should provide Ladder with many opportunities in the year ahead.

Our diversified mix of investments has weathered the storm felt in the CRE markets as rates rose quickly after being near zero for years.

We believe our stable book value over the last several years has validated our credit acumen along with our multi-cylinder approach towards allocation of capital. Now, fully on offense, we plan to grow our earnings over time and our book value.

We can take some questions now.

(Operator Instructions) Jade Rahmani with KBW.

Thanks very much. 2026 seems to be off to a pretty volatile start, and there are jitters in sectors of the economy around the impact of AI on key, areas.

All the CapEx spend, big tech is targeting and volatility in interest rates. At the same time, CRE loan spreads have continued to tighten. So I just wanted to start off by asking if Ladder's planning to do anything different in light of the potential volatility.

This is Brian. Jade, thanks for the question. I don't think we're planning to do anything differently given the volatility. It's been pretty volatile, although in the beginning of almost every year, spreads tend to tighten after the stock market has hit some records in the at the end of the year before.

Because I think there's rebalancing, and I think the insurance companies have fresh allocations of capital that are usually larger than the ones before because of the stock market rebalancing. But we're not overly impacted by that.

We are not a fan of data centers as far as calling them real estate assets. So we weren't doing that before, so I don't think we're going to do it now. I do think that, a lot of the private credit, lenders in the CLO market on corporates, below investment grade, they may be impacted more by that.

And I think naturally you get dragged when you're in some, ETFs with them. But overall, no, I don't anticipate it.

If anything, I think if the market is getting concerned about the spend on AI and data centers, there's probably a place in the world for a safe dividend that is based on bricks and mortar and utility for, normal everyday people as opposed to the next great wave of technology.

So I don't think this volatility does anything to us other than present opportunities, because I think that a lot of the big operations, the big asset manager will sit down and decide, how they want to allocate capital here and of course they will pull the real estate guys into that conversation too. But at Ladder, we're independent, we're not having any trouble with this.

Thanks. And in terms of the plan to drive earnings growth and that being the main focus, what ROE do you think is achievable within the current capital structure and where do you see, maybe the loan portfolio going in size by year end and do you plan to grow the real estate equity portfolio?

I'll try to take those in order and maybe in backwards order. We do plan to grow the real estate equity portfolio. We've been doing that a little bit more lately than in quarters past. We're selective. We're not, just making an overall call on real estate coming back, but, there are some opportunities.

Typically, when we make an investment, there's a little bit of capital tension involved in the capital allocation of the, it might be the prior lender, it might be the owner. It might be a mezz owner. But we're pretty comfortable, making investments, especially when they've been reset on the valuations.

A lot of the buildings we've invested in in New York on the office side, we're investing at levels that these buildings were purchased at 30, 35 years ago. And just a quick report card, the first one we did in New York, the first office building we invested in went from 55% to over 90% occupancy in under a year and a half.

So we'll probably refinance that pretty soon and that might create some capital too, a capital event. So, yes, we do plan to grow that. As far as the loan portfolio, given our pension for lower leverage models. I suspect we can probably get the assets as opposed to loans.

I'm rather agnostic as to how we go about getting to the levels, but I suspect we'll take the portfolio up a little over $6 billion by year end. And what was the first part of the question, Jade, if you don't mind, ROE.

ROE, I would say 9% to 10%, and that will largely depend on how much of a resurgence of the conduit comes back. You could easily go above that. Some of our real estate may be ready to harvest some gains too, so we may have some, one-timers that will drive the ROE higher.

Not really anticipating anything getting worse. I think the visibility we have into our portfolio is good enough that I don't see any negative surprises coming our way. We're aware of the, any problems that may exist and they don't look too bad to us.

Great, thanks so much.

Timothy D'Agostino with B. Riley Securities.

Thank you for taking the question. Quarter-over-quarter, obviously, net interest income ticked down. Looking at top-line interest income, it was about, 3.5 million lower.

Obviously so far has come in over the past couple of months, but I was wondering as well, like is the pressure at the top-line also attributable to maybe loans being funded that were written in 4Q being funded 1Q, just kind of understanding that dynamic a little bit better. Thank you.

Okay, I think that we had a reasonably good quarter as far as loan originations go in the, low 400s followed by the third quarter in the low 500s. I've always said these can be a little bit lumpy and then if you just look at a 90 day period you might get confused.

But if you actually stretch it out over a quarter in front and a quarter in back, it actually is a pretty smooth process. We did fund a lot of our loans at the end of December. That was not by design. I don't know why that happened, maybe people will get a little more serious about getting closed before year end.

So we didn't really enjoy the net interest income from a lot of our new originations, but we will pick it up in the first quarter. And I think the second thing that happens with net interest income is the payoffs, anything that comes in and pays off, there was only $107 million in the fourth quarter, but the payoffs tend to have relatively high rates compared to the newer loans that that we're writing.

And that's oftentimes because a lot of them have been modified and there's cash flow sweeps and these things are being refinanced.

But the good part is while we do see a slight dip from those loans unspread, we're happy to see them go because we've been in triage with a few of them and we're very happy with the results generally on how our asset management team is doing a great job of getting capital back into the building.

And we think that'll continue and we are not having too much trouble anymore finding suitable investments on the outside for new loan originations. So again, I think we'll pick that up as we go on. I think we already had $250 million in the in the month of January 2026.

So again, I don't take too much, offense to looking at a one quarter, at a possible dip. I suspect the heavy refinances are over and so we're now going to be converting a lot of cash out of the unsecured lines as well as our cash positions and sell some securities.

We will be funding, more loans that have higher yields than the fuel that we get them from being the unsecured line as well as the securities book. The securities book is paying off rather quickly, and that kind of makes sense.

Because as the defroster went on in the commercial real estate, refinance market, a lot of loans paid off and as those loans pay off in the CLOs, the AAA portion dips, and you have large subordination that happens to be what we own mostly. And they're being called, so they're being refinanced into new CLOs and with old and new loans.

So again, very healthy part, so while payments are slowing that, payoffs are slowing down in the loan book, they're picking up in the, securities book, and that's right on schedule. There's nothing unusual about that. That's what we're anticipating and we expect that to continue.

Okay, great. Thank you so much. That's all for me.

Steve Delaney with JMP Securities.

Thank you. Good morning, everyone. The shift towards a more lending focused business model moving out into 2026, remaining diversified but a re-emphasis on lending. When I look at the commercial mortgage regroup, 22 companies.

I mean, the losses on bridge loans over the last three to five years have just been, have been huge. I guess Brian, when you look back, over the last five or six years. What were the biggest mistakes, and underwriting, I mean just on a very high level simplistic term.

I guess what are you going to do and your underwriting of your bridge loans, moving forward to ensure that we don't have the kind of carnage that we saw with all those post-COVID, generation of bridge loans, within the industry.

I appreciate your thoughts on lending discipline and what those bridge loans look like going forward. Thank you.

Okay, I'll try to, bear what's in the cupboard here as to the warts and all conversations that we get into sometimes, but I think that many of the losses that occurred across the financial sector really were as a result of a deadly combination of low cap rates driven by zero interest rates delivered by the Fed.

And people were lots of liquidity as the Fed was making alternative investments, you had to get out of the banks, right? You couldn't keep your money there because there was no return. So it got a little bit undisciplined and low, as we know, apartment buildings in particular were being purchased at three caps.

And then the other part of that deadly combination I mentioned is rapidly rising interest rates. So whereas a lot of the rents in those apartment buildings did go up, the operating expenses and the refinance, what's required for a debt yield went up more.

So that was a bit of a rather easy to look back and see what happened there. The work from home phenomenon caused some problems too, and I think that there had been maybe a little bit of overinvestment in a lot of cities.

As we tended to avoid those, they used to be called gateway cities, where you had large airports, big population centers, large downtown corporates, and you throw a crime wave into that and those get into trouble pretty quickly, especially with people that are working from home.

I think the largest part of that is over. There's a few cities that are probably still going through it. And listen, if I have to be honest, our losses have been de minimis compared to others. However, not compared to our models. We think we, made some mistakes and we want to make sure we don't make them again.

If I had to look back on one theme that I wish we had not done, I think you have to be very careful when you're writing a bridge loan and you're refinancing one of your competitors bridge loans. Because it's the competitor knows more about it than you do.

And if it was that good of a loan, he would keep it, he's just going to take the payoff and make another loan. So if you really like the loan that you're writing there, you might get into trouble. We got into a couple of loss situations in the office sector. Really minor though.

I mean, I'm pretty happy with the way we underwrote them, but our losses over the years, while quite small relative to the portfolio, we had Wilmington, Delaware, Portland, Oregon this quarter. I suspect we will have a small loss on a building in Minneapolis.

And San Francisco has certainly caused its set of problems in these portfolios, but the good part is Ladder focuses oftentimes on what is called flyover cities where there are population centers that are quite stable, but most people have never been to those cities.

So we do like the Midwest. We've always liked the Southeast. Texas, where we're comfortable with in certain places, but you have to always be careful. And when you're the industry leader in volume, which unfortunately a lot of operations try to be.

All you're really telling me is you paid more for things than you anyone else would. And when it whiplashes back at you and goes the other way, you suffer the biggest losses. So you might remember when we started this company, we were sometimes asked why we don't have a big parent company to support us in during difficult times, and we call these things kick standers REITs.

So you've got giant asset managers with these small REITs and you know you saw Apollo recently roll up, sell a loan portfolio to an insurance company internally. We don't have that at Ladder and so the other side of that is we don't have a parent company suggesting the loans we should be making.

And so we're very independent in how we operate and with the insider ownership of the company, it really is people with first and last names making loans and if you just look at how our book value has held up relative to what I'll consider our former peer set, we've just done much better and that doesn't surprise me after 40 years in the business. I'm proud of it.

But on the other hand, we're still quite wary about things that could go wrong. So I think to sum up quickly on your question, I think I'll be much more cautious. We were always cautious, but more cautious on large cities with unionized workforces and a fair amount of crime.

I think we'll also be very cautious around refinance financing competitor bridge loans that have been on their balance sheet for three years, and the obvious question is, well, why aren't they refinancing it?

So lessons learned, thankfully they weren't learned with anyone dying, but they were learned with small losses relative to competitors. However, we still feel like our losses were unacceptably high.

So bridge loans doesn't have to be a four letter word, right? You do it.

No, not at all.

All right, thank you for the comments, Brian.

Gabe Poggi with Raymond James.

Hey, good morning, everybody. Thanks for taking the time. Brian, I want to ask a question, kind of piggybacking what Steve just asked about. Can you talk about the competitive landscape as it pertains to banks in particular, regional banks getting back in the fray.

You guys made 12 loans in the fourth quarter, 340 overs, that's super attractive, but just kind of how you think about the go forward in '26 with a return of some bank competition. That'd be helpful. Thank you.

First of all, the banks are becoming more competitive, yes. However, what we're seeing is they're making more construction loans and we're very comfortable refinancing properties that are in lease-up and that are brand new.

So when I look at the landscape of our loan portfolio and the buildings that secure those loans, they're clearly newer and recently built and much better than the inventory that went into the downturn when interest rates were at zero where everybody thought they could buy a garden apartment complex from the 1970s and spend a few dollars and raise the rent and that was going to be no problem.

So we do move to higher ground during periods of volatility, which is why we own AAA securities as opposed to BBB securities. And in addition to that, we make loans on newer properties.

And the good part now is almost everything we do has a level that's been reset and the expectation of the borrower is more sober than it was, when everybody was competing for low cap.

If you take a look at the names of the borrowers that show up in a lot of the syndicated loans that got into trouble, and I won't name them here, but I will tell you they're largely absent at Ladder. And the reason why is because they were shopping around asking for 80% to 85% financing, and they had several willing participants in that.

We did not. I asked Adam Seifer, our head of originations, how do we avoid these guys? And he goes, those packages, submissions wound up in the garbage because it started with 80% leverage, and he said we didn't feel like we had to do that.

So that was a nice bit of underwriting there that avoided problems. But I would also tell you the banks are not, really competing on the bridge loan side. Some insurance companies are, but I think with the amount of regulators in the bank's, offices that are looking to criticize loans, if anything looks amiss, anything but a stabilized cash flow, is not really landing in the banks at all.

So, and a lot of our, the competitive set that we used to deal with. They are, I would call them permanently smaller unless they go out and raise capital. I mean they don't have a valuation problem. They've lost money and that shows up in the discounted book value.

So we believe, and I don't want to get too many secrets out of the kitchen here, but we think that the single asset world, $250 million and over is being handled by the large banks that, are on Park Avenue and San Francisco.

But the loans that we do, we historically have had an average loan balance of about $25 million. I think you'll see that tick up a little bit. And the orphan in the world right now for getting a loan from a large bank or from a conduit or from a bridge lender is at around $80 million to $100 million.

It's a little too big for single, it's too big for conduit. It's too small for a single asset and it's too big for a regional, but it fits us just fine. So we're pretty comfortable in fact, when we said in this earnings call that we had $430 million in loan originations, we did have a $200 million loan fall out of application during the quarter.

And if it had come in, then we'd be talking about $630 million instead, but I still wouldn't think that would change our opinion of anything other than, on a certain date we had a certain amount of loans closed. So yeah, they're back, they're competing again.

And I think that, their cost of funds is still rather high, but the Fed. When the Fed got rid of T-bills at 5.5%, that is probably the single biggest event that helped the regional banks because they. Became more competitive on deposits.

Whereas, when they had to raise their deposit rate, and as banks have a five year conveyor belt where the rates, higher rate loans pay off as rates are falling. That really did help them a lot.

And if you remember we had $2 billion worth of T-bills at 5.5%, we moved that into securities, and now we're going to move out of those securities into bridge loans and conduit. The conduit business is the wild card. As to, because that's a stabilized cash flow and that does compete with regional banks.

And that business is still, I would call it soft. There's just not a lot of volume there. If you look at conduit deals, there's 789 originators in those pools. So, but we're having the beginnings of those discussions and it feels a little bit like 2008 and 2009 to me because it will come back.

I mean, as these properties come out of that recession that we went through and the low cap rate environment, these cash flows will start to stabilize at higher rates and that should be a tailwind for the conduit business at large and also Ladder's participation in it.

Thank you, very helpful.

We have reached the end of the question-and-answer session. I'd now like to turn the call over to Brian Harris for closing comments.

Thank you for, all the support in 2025 and understanding our thematic way of piecing one act into another, as we make our investment decisions. But we laid the groundwork that will be here for years, by becoming an investment grade company and largely financing ourselves with, unsecured debt.

We're going to keep doing that. We are the only investment grade company in the space. We will not be the last, I don't think. But we are very happy with the way we performed and also, how ready we are now to move forward into a reset level of prices for real estate.

And a liquidity set that you don't want no liquidity, you don't want no competitors, but you also don't want too many at one time. The private credit world is largely controlled by large asset managers, and most of them are not writing loans that compete with us.

So we think we've got a very positive runway ahead of us and we look forward to 2026 and we are completely on offense now. No more T-bills. No more AAA's.

We're going to start moving into lending ownership of real estate as well as, capital markets activity and securitization. So, long-winded answer there, but a big thank you to, all of our investors and we have an organic plan in place to get the market cap of this company higher through earnings.

Well, okay, this concludes today's conference. You may disconnect your lines at this time. And we thank you for your participation.