Executive Summary

Q1 2025 was a reinvestment quarter: GAAP diluted EPS was $0.09 and distributable EPS was $0.20, with after-tax distributable ROAE of 6.6% as Ladder redeployed liquidity from record 2024 payoffs into $329M of new loans and $521M of AAA securities .
Balance sheet strength and flexibility remain a core theme: liquidity of ~$1.3B (including ~$480M cash), 83% of assets unencumbered, 72% of debt unsecured at a 5.2% weighted average coupon; gross leverage of 1.83x and adjusted leverage of ~1.4x position Ladder to prudently add leverage as originations scale .
Corporate actions are supportive: Board increased the repurchase authorization to $100M in April; Fitch subsequently upgraded Ladder to investment grade (BBB-) in May, making it the only commercial mortgage REIT with an investment-grade rating — a potential multiple/cost-of-capital catalyst .
Estimates context: Q1 distributable EPS missed consensus (0.20 vs 0.218*) and “total revenue” missed (Actual ~$51.2M vs ~$59.8M*), while Q4 2024 had a revenue beat and a slight EPS miss; originations expected to accelerate, which could drive estimate revisions as loan yields outpace securities carry .
Near-term stock reaction catalysts: IG rating uplift and higher buyback authorization, combined with management’s expectation for originations to exceed Q1 and potential conduit securitization tailwinds if the curve steepens .

What Went Well and What Went Wrong

What Went Well

Origination momentum and pipeline: New loan originations ($329M) outpaced payoffs ($181M); 74% of originations were multifamily or industrial; pipeline under application is ~$250M .
- “We originated $265 million of first lien balance sheet loans at credit spreads ranging from 270 to 700 basis points and averaging 394 basis points over 1 month SOFR.” — Brian Harris .
Liquidity and unsecured funding mix: ~$1.3B liquidity, 83% asset base unencumbered, 72% of debt unsecured at 5.2% coupon; repurchased $20M of unsecured bonds, called a CLO, repaid $323M of secured CLO debt .
Securities portfolio build at attractive spreads: Added $521M AAA securities at ~5.79% unlevered yield in Q1; portfolio $1.5B at 5.67% unlevered yield and continued adding into widening in April — all unencumbered for additional liquidity .

What Went Wrong

Earnings vs consensus headwinds: Q1 distributable EPS and “total revenue” were below Street consensus, reflecting timing of redeployment and muted payoffs vs prior year; Q1 GAAP diluted EPS fell to $0.09 from $0.25 in Q4 .
Nonaccrual additions: Two loans totaling $38.7M (hotel and office) were placed on nonaccrual; nonaccrual loans at $116M across 4 loans; however, CECL reserve held at $52M .
Lower carry vs prior quarter: Net interest income decreased to $20.3M from $27.2M in Q4 2024 as the portfolio shifted and payoffs muted earnings temporarily; total other income also declined quarter-over-quarter .

Financial Results

Note: “Total revenue” below is defined as Net Interest Income + Total Other Income per company statements.

Metric	Q3 2024	Q4 2024	Q1 2025
Net Interest Income ($USD Millions)	$38.416	$27.212	$20.329
Total Other Income ($USD Millions)	$32.550	$41.404	$30.874
Total Revenue ($USD Millions)	$70.966	$68.616	$51.203
GAAP Diluted EPS ($USD)	$0.22	$0.25	$0.09
Distributable EPS ($USD)	$0.30	$0.27	$0.20
Net Income ($USD Millions)	$27.913	$31.384	$11.775
After-tax Distributable ROAE (%)	9.8%	8.9%	6.6%

Segment/KPI highlights (current quarter unless noted):

Loan portfolio: $1.7B, 8.7% WAVG yield; originations $329M; payoffs $181M; future funding commitments $40M .
Securities: $1.5B AAA/investment grade, 5.67% WAVG unlevered yield; added $521M in Q1 and >$160M in April; 99% investment grade, 96% AAA; portfolio unencumbered .
Real estate: $892M portfolio, $12.2M NOI in Q1; sold one net lease property for $13M proceeds, gains: $0.9M distributable and $3.8M GAAP .
Credit & reserves: nonaccrual loans $116M (4 loans); CECL reserve $52M (~$0.41/share) .
Liquidity/leverage: ~$1.3B liquidity incl. ~$480M cash; 83% assets unencumbered; 72% debt unsecured at 5.2% coupon; gross leverage 1.83x; adjusted leverage ~1.4x .

Guidance Changes

Management provided qualitative guidance rather than numeric ranges; dividend declared for the quarter.

Metric	Period	Previous Guidance	Current Guidance	Change
Originations pace	FY 2025	Not quantified	Management expects originations to exceed Q1 pace	Raised (qualitative)
Conduit participation	FY 2025	Limited (inverted curve backdrop)	Anticipates greater conduit activity if yield curve steepens	Raised (conditional)
Funding mix	FY 2025	Shift toward unsecured underway	Potential additional unsecured issuance if volatility decreases; no pressure to issue	Maintained (flexible)
Dividend per share	Q1 2025	$0.23 (prior quarters)	$0.23 declared, paid Apr 15, 2025	Maintained
Share repurchase authorization	As of Apr 23, 2025	$66.8M outstanding under prior authorization	Increased to $100M authorization	Raised

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 2024 and Q4 2024)	Current Period (Q1 2025)	Trend
Origination momentum	“Return to offense” with strong liquidity/low leverage; distributable EPS $0.30–$0.27	$329M originations; 74% multifamily/industrial; expected to exceed Q1 pace	Improving
Securities deployment	Growth in AAA; $500M unsecured bond in Q3; strong liquidity	Added $521M AAA in Q1; continued adding in April amid spread widening; all unencumbered	Opportunistic build
Yield curve/conduit	Inverted curve limited conduit [2H24 context]	Expect steepening curve; plan to securitize fixed-rate loans; conduit is highest ROE product	Potential tailwind
Leverage & funding	Low leverage and shift to unsecured in 2H24	Gross leverage 1.83x; adjusted ~1.4x; 72% unsecured at 5.2% coupon; undrawn $850M revolver	Capacity to add leverage
Credit/reserves	Q3 provision $3.1M and $5M charge-off; reserve strengthened	Two loans ($38.7M) to nonaccrual; CECL $52M; no impairments taken	Stable reserves; targeted risk mgmt
Macro/tariffs	Not emphasized previously	Geopolitical and tariff reemergence may dampen CRE demand; presents selective opportunities	New headwind/opportunity

Management Commentary

“Getting paid back is the most important part of the mortgage business… we’re excited to redeploy the liquidity generated from loan payoffs into new loans at lower reset basis” — Pamela McCormack .
“We expect to favor more investments in loans… when volatility causes spikes in credit spreads… we benefit from the ability to pivot and add more highly rated liquid securities” — Brian Harris .
“As of March 31, 2025, Ladder’s liquidity was $1.3 billion… gross leverage was 1.83x… 72% of our debt… unsecured… at 5.2%” — Paul Miceli .
“We are under no pressure to issue any new debt and will only do so if we believe conditions are attractive” — Brian Harris .
“Our business plan is unfolding… cash and T-bills into securities… as we write higher-yielding loans” — Brian Harris .

Q&A Highlights

Origination spreads and mix: Average spreads ~394 bps over 1M SOFR with a wide 270–700 bps range; 74% multifamily/industrial; liquidity and speed support premium pricing in special situations .
Originations trajectory: Management expects originations to exceed Q1 pace despite market volatility; intent to migrate out of securities into higher-yielding loans .
Net lease strategy: Properties are “for sale every day”; likely minor decline over next 2 quarters, then potential growth with a steeper curve enabling attractive arbitrage .
Securities and hedging: Preference for floating-rate, short-duration AAA instruments (e.g., 2-year AAAs/CLOs); limited use of swaps and minimal leverage; “best hedge is the price you buy at” .
Asset allocation: No fixed “steady-state” mix; expect more loans, more conduit if curve steepens, fewer securities/cash over time supported by the undrawn $850M revolver .

Estimates Context

Period	Metric	Consensus	Actual	Outcome
Q1 2025	Distributable EPS ($)	0.218*	0.20	Miss
Q1 2025	Revenue ($USD Millions)	59.83*	51.20	Miss
Q4 2024	Distributable EPS ($)	0.2767*	0.27	Slight miss
Q4 2024	Revenue ($USD Millions)	66.27*	68.58	Beat

Values with asterisks retrieved from S&P Global.

Implications: Q1 misses reflect timing of redeployment, lower net interest income vs Q4, and temporary muted payoffs; management’s expectation to exceed Q1 originations and preference for higher-yielding loans over securities suggest potential upward bias to forward revenue/EPS trajectories if execution accelerates .

Key Takeaways for Investors

Ladder is pivoting from cash/T-bills to higher-yielding loans while maintaining robust liquidity and modest leverage — a setup for earnings expansion as originations scale .
The increased $100M buyback authorization and Fitch IG upgrade (BBB-) improve capital flexibility and could compress funding costs and support valuation multiples .
Near-term earnings cadence hinges on originations outpacing payoffs and conduit activity returning with curve steepening; management expects positive momentum .
Credit remains contained: nonaccruals at ~$116M with no impairments taken and CECL at ~$52M; underwriting discipline and reserve coverage provide downside protection .
Securities portfolio is an opportunistic earnings lever: unencumbered AAA assets added into widening spreads provide stable carry and optionality to finance or rotate into loans .
Dividend coverage likely improves as redeployment progresses and leverage prudently increases toward the 2–3x target range; dividend held at $0.23 for Q1 .
Tactical drivers for the stock: IG rating validation, rising buyback capacity, accelerating originations and potential conduit contribution; watch curve dynamics, tariffs/macro volatility, and securitization windows .

Ladder Capital Corp (LADR)·Q1 2025 Earnings Summary