Executive Summary

Ladder delivered distributable EPS of $0.25, above S&P Global consensus of $0.23, while S&P revenue was ~$57.6M vs ~$59.8M consensus (EPS beat; modest revenue miss). Distributable ROAE improved to 8.3% from 7.7% in Q2 . S&P estimates marked with * (Values retrieved from S&P Global).
Q3 marked the highest quarterly loan originations in 3+ years ($511M; 17 transactions at 279 bps spread), net loan growth to ~$1.9B, and the inaugural $500M 5-year IG unsecured bond at 5.5%, taking unsecured to ~75% of debt and 84% of assets unencumbered .
Credit stable: no new non‑accruals; non‑accruals fell to 3 loans/$123M (2.6% of assets); CECL/CFO reserve steady at $52M ($0.41/sh) . Office exposure reduced via payoff; now ~$652M (14% of assets) with half in two South Florida assets .
Management expects Q4 loan originations to exceed Q3, sees continued downward drift in cost of funds with Fed cuts, and aims to grow the loan book by ~$1B+ in the coming quarters while running modest leverage (2–3x) .
Potential catalysts: sustained IG funding access and tightening spreads; faster loan book growth; portfolio mix shift from securities to higher-yield loans; potential investor re‑rating toward IG property REIT comp set per management commentary .

What Went Well and What Went Wrong

What Went Well

Record origination momentum: $511M of new loans at a 279 bps spread; net loan growth +$354M as paydowns moderated; pipeline >$500M under application .
Capital structure upgrade: closed first $500M IG bond (5.5% coupon, +167 bps), taking unsecured debt to ~75% and unencumbered assets to ~84%; IG bonds have tightened in secondary, supporting lower future funding costs .
Credit and income stability: non‑accruals down to 2.6% of assets with no new non‑accruals; real estate segment generated ~$15.1M NOI; securities book remains high‑quality (99% IG/96% AAA) and liquid .

Selected quotes:

“We… saw our highest quarterly loan origination volume in over three years and successfully closed our inaugural $500 million investment grade bond offering.” – CEO Brian Harris .
“We expect fourth quarter loan originations to exceed third quarter production.” – Management .
“As of quarter end, 75% of Ladder’s debt consisted of unsecured corporate bonds… [and] 84% of our balance sheet assets remain unencumbered.” – CFO Paul Miceli .

What Went Wrong

Top-line modestly below consensus: S&P revenue of ~$57.6M vs ~$59.8M estimate despite stronger NII; offset by weaker held-for-sale/derivative items vs Q2’s conduit sale gains (see below). S&P figures marked with * [GetEstimates].
Y/Y comp headwinds: GAAP diluted EPS $0.15 vs $0.22 in Q3’24; distributable EPS $0.25 vs $0.30 in Q3’24, reflecting lower NII and higher funding costs vs prior year’s peak NII .
Margins vs a year ago: After-tax distributable ROAE 8.3% vs 9.8% in Q3’24; management plans to lift ROE via larger loan book and falling funding costs as rates decline .

Financial Results

Note: For a finance REIT, we present “Operating Revenue” as Net Interest Income (NII) + Total Other Income (proxy for revenue comparability). All cells include document citations; S&P Global items carry an asterisk and footnote.

Metric	Q3 2024	Q2 2025	Q3 2025
Operating Revenue ($M) = NII + Other Income	~$70.97 (38.42 + 32.55)	~$56.26 (21.53 + 34.73)	~$57.44 (27.79 + 29.65)
Net Interest Income ($M)	$38.42	$21.53	$27.79
Total Other Income ($M)	$32.55	$34.73	$29.65
Distributable EPS ($)	$0.30	$0.23	$0.25
GAAP Diluted EPS ($)	$0.22	$0.14	$0.15
After‑tax Distributable ROAE (%)	9.8%	7.7%	8.3%

Vs. S&P Global consensus (current quarter):

Metric	Actual (S&P)*	Consensus (S&P)*	Surprise
Distributable EPS ($)	0.25*	0.23*	+0.02
Revenue ($M)	57.58*	59.80*	-2.22

*Values retrieved from S&P Global.

Drivers (Q3 vs Q2 and YoY):

NII improved QoQ ($27.79M vs $21.53M) on higher loan balances/spreads; real estate income stable ($26.67M vs $25.78M). However, held-for-sale/derivatives swung from Q2 gains to small losses (Q2 conduit gains $4.91M vs Q3 $(0.38)M), tempering other income .
Tax expense declined QoQ ($0.96M vs $3.71M), supporting GAAP EPS and distributable EPS improvements .
YoY, NII lower given prior-year elevated balances/yields (Q3’24 NII $38.42M), explaining EPS/ROAE declines vs Q3’24 .

Segment/KPI Snapshot

Segment / KPI	Q2 2025	Q3 2025
Loan originations ($M)	$173M originated; $188M more post‑Q2 (context)	$511M across 17 loans; spread 279 bps
Loan portfolio balance	~$1.6B	~$1.9B (~40% of assets)
Loan yield / spread	~9% (Q2)	~8.2% yield; spread 279 bps (mix effect)
Non‑accrual loans	5 loans; $162.3M (3.6% assets)	3 loans; $123M (2.6% assets); no new non‑accruals
Office loan exposure	n/a	~$652M (~14% assets); payoff of $63M office loan reduced exposure
Securities portfolio	~$2.0B; 99% IG / 97% AAA; 5.9% yield	~$1.9B; 99% IG / 96% AAA; 5.7% yield
Securities activity	Bought $600M AAA; selective sales	Bought $365M AAA; $164M paydowns; $257M sales (net modest reduction)
Real estate portfolio	~$936M; NOI $15.1M; 149 net lease, avg 7+ yrs	~$960M; NOI $15.1M; 149 net lease; ~7 yrs
Liquidity	~$1.0B (incl. undrawn $850M revolver)	~$879M (cash + undrawn revolver)
Unencumbered assets	~$3.7B (83% of assets)	~$3.9B (84% of assets)
Debt mix / coupon	~74% unsecured; WAC 5.3%; next maturity 2027	~75% unsecured; WAC 5.3%; next maturity 2027
Undepreciated BVPS	$13.68 (incl. $0.41 CECL)	$13.71 (incl. $0.41 CECL)
Dividend per share	$0.23 (paid Jul 15)	$0.23 (declared; paid Oct 15)

Guidance Changes

No formal numerical revenue/EPS guidance was provided; management offered qualitative outlook.

Metric	Period	Previous Guidance (Q2 call)	Current Guidance (Q3 call)	Change
Loan originations	Q4 2025	Expect loan growth; pipeline building	Q4 originations expected to exceed Q3	Raised (more specific, near‑term)
Loan portfolio size	Next 4–5 qtrs	Targeting growth; room to add leverage	Likely +$1B (over/under) from ~$1.9B; aiming toward prior ~$3.4B level	Raised specificity
Leverage target	Ongoing	2–3x; modest leverage; shift to unsecured	Maintain 2–3x; composition increasingly unsecured	Maintained
Funding strategy	2025+	Consider additional IG issuance; revolver SOFR+125	IG bonds tightened post‑deal; will favor revolver if rates fall; opportunistic issuance	Maintained (tactical nuance)
Securities strategy	2H 2025	Rotate from T‑bills → AAA; sell into tightening	Modest net reduction; will add on volatility, redeploy to loans	Maintained
Dividend	Ongoing	$0.23 declared in Q2	$0.23 declared for Q3	Maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2 2025)	Current (Q3 2025)	Trend
Capital structure / IG access	Q2: Achieved IG (Baa3/BBB-); $500M IG bond at 5.5%; 74% unsecured; revolver at SOFR+125	IG bonds trading tighter; 75% unsecured; 84% unencumbered; lower funding costs expected	Positive; continued tightening
Origination momentum	Q1: $329M loans; pipeline ~$250M ; Q2: muted originations but building pipeline	$511M in Q3 at 279 bps; Q4 to exceed Q3; focus multifamily/industrial; $500M+ under app	Accelerating
Securities rotation	Q1–Q2: Deployed into AAA; plan to sell into tight spreads and redeploy to loans	Bought $365M; sold $257M; net down; view spreads may widen; retain liquidity	Gradual runoff
Credit quality	Q2: 5 non‑accruals $162M; CECL $52M	3 non‑accruals $123M; no new; CECL $52M (adequate)	Improving
Office exposure	Q2: selective foreclosures/sales; cautious	Payoff of $63M office; office now $652M (14% assets); half in strong FL assets	De‑risking
Macro / rates	Q1–Q2: expect curve to steepen; Fed cuts likely; conduit could return	Expect cost of funds to drift down; floors in bridge loans; able to add ROE as rates fall	Constructive
Investor positioning	Q2: Aim for IG property REIT comp set	Emphasized re‑rating narrative; lower required dividend yield over time	Reinforced

Management Commentary

Strategic positioning: “As one of our premier debt capital markets bankers noted, [the IG bond] firmly planted Ladder's flag in the investment‑grade market… positioning us to lower borrowing costs… and improved shareholder returns.” – President Pamela McCormack .
Portfolio shift: “We’re hoping to add $1–$2B of assets net on the balance sheet… pay [AAA securities] off, and then reinvest that money into a loan portfolio that's earning 8.5%… bodes very well for dividend, ROE, as well as earnings.” – CEO Brian Harris .
Re‑rating goal: “We believe we are more properly comped against other investment‑grade rated property REITs… If we succeed… we think our stock price will start to reflect a lower required dividend yield.” – CEO Brian Harris .

Q&A Highlights

Origination strategy and IG advantage: Management is seeing slightly larger deals with better asset quality (newer Class A multifamily/industrial); competitive dynamics in the $50–$100M range are favorable; no construction loans in current portfolio .
Loan book growth targets: After a period of heavy payoffs in 2024, Q3 inflected to net growth; management expects ~$1B+ growth from the ~$1.9B level, with business momentum improving into Q4 .
Rates, spreads, and funding: Despite expected Fed cuts, recent widening in mortgage/CLO spreads supports higher loan rates; revolver at SOFR+125 is attractive; will tactically balance revolver draws vs opportunistic IG issuance .
Credit and reserves: CECL/“CFO” reserve steady at $52M ($0.41/sh); no new non‑accruals; office exposure further reduced with payoff; management views reserve as adequate .
Dividend and buybacks: Dividend of $0.23 maintained; repurchased $1.9M (171K shares) at ~$11.04 in Q3; $91.5M authorization remaining .

Estimates Context

EPS: Distributable EPS $0.25 exceeded S&P Global consensus $0.23 by $0.02; # of EPS estimates: 5*. Revenue: S&P revenue $57.6M vs $59.8M consensus (~$2.2M shortfall); # of revenue estimates: 2*. Target price mean ~$12.60* (no change shown). S&P values marked with * (Values retrieved from S&P Global).
Implications: The EPS beat despite a modest revenue shortfall suggests margin/expense/tax favorability and operating mix (higher NII, lower taxes). Given management’s outlook for stronger Q4 originations and falling funding costs, forward EPS estimates may drift higher, while revenue sensitivity will hinge on conduit gains and held‑for‑sale/derivative items .

Key Takeaways for Investors

EPS beat with improving ROE trajectory: Distributable EPS $0.25 and ROAE 8.3% benefited from higher NII and lower taxes; management’s blueprint (loan growth + lower cost of funds) supports further ROE expansion .
Origination flywheel is turning: $511M in Q3, Q4 expected to exceed Q3; mix remains multifamily/industrial with attractive attachment points; this should lift NII and distributable earnings into 2026 .
Capital structure now a competitive edge: 75% unsecured, IG access, and 84% unencumbered assets provide durable, low‑volatility funding and quick draw liquidity (SOFR+125 revolver) .
Portfolio mix shift to loans: Expect securities to decline through paydowns/sales and proceeds to be redeployed into higher‑yielding loans, supporting margin expansion and dividend coverage .
Credit risk contained: No new non‑accruals; office exposure down; reserve steady at $52M; remaining office concentrated in strong South Florida assets .
Trading implications: Near‑term, the combination of EPS beats, stronger origination guidance, and IG funding tightness are positive catalysts; medium‑term, a valuation re‑rating toward IG property REITs is management’s stated objective as ROE trends up and leverage stays modest .
Watch items: Revenue variability from held‑for‑sale/derivative items; pace of Fed cuts and spread dynamics; timing of conduit activity resumption; execution on $1B+ loan book growth .

Appendix: Source Documents

Q3 2025 8‑K/Press Release: GAAP EPS $0.15; Distributable EPS $0.25; ROAE 8.3%; income statement and balance sheet .
Q3 2025 Earnings Call: Origination details; liquidity; unsecured debt composition; credit quality; strategy/outlook .
Q3 2025 Other Press Releases: Dividend $0.23 (paid Oct 15) ; earnings date notice .
Q2 2025: Distributable EPS $0.23; ROAE 7.7%; liquidity $1.0B; non‑accruals $162.3M .
Q1 2025: Distributable EPS $0.20; liquidity $1.3B; early year AAA build; pipeline formation .
Q3 2024 (YoY): GAAP EPS $0.22; Distributable EPS $0.30; ROAE 9.8%; higher NII baseline .

S&P Global estimates noted with * (Values retrieved from S&P Global).

Ladder Capital Corp (LADR)·Q3 2025 Earnings Summary