Ladder Capital Corp

Good afternoon and welcome to Ladder Capital Corp's earning call for the first quarter of 2021. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, today's call is being recorded.

Good afternoon. This afternoon, Ladder released its financial results. The quarter ended March 31st, 2021. 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 for important factors that could cause actual results to differ materially from these statements and projections. We do not undertake any obligations to update our forward-looking statements or projections unless required by law. In addition, LADRR will discuss certain non-GAAP financial measures on this call, which management believes are relevant to assessing the company's financial performance. The 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 supplemental presentation, which is available in the investor relations section of our website. At this time, I'd like to turn the call over to Ladder's President, Pamela McCormack.

Good evening, everyone. With 2020 behind us, we are at a pivotal turning point and are actively focused on rebuilding our investment portfolio and earnings. In the first quarter, we started the process with our first loan originations in a year, and we expect new originations to outpace loan payoffs over the coming quarters. For the first quarter, Ladder produced distributable earnings of $3.2 million, or 4 cents per share. Since March 31, 2020, we converted over $3 billion of investments into cash, including payoffs for 79 loans, totaling $1.5 billion or 45% of our balance sheet loan portfolio. As of March 31st, 2021, we had $1.3 billion of unrestricted cash after reducing our overall leverage by $1.9 billion or 34% of our total debt. Associated therewith, We also reduced our mark-to-market debt by $1.9 billion, or 68% since March 31, 2020. Consequently, as of March 31, 2021, our adjusted leverage stood at 2.3 times, 1.4 times net of cash, and only 0.9 times net of cash in our principally AAA-rated securities. We are pleased with the credit quality and performance of the assets on our balance sheets. We enjoyed an unparalleled level of loan repayments over the past year, reflecting the strength of our underwritten portfolio and the wide array of refinancing options available to our middle market borrowers. Going forward, our shareholders can expect to see us remain committed to being basis lenders with disciplined in-house credit underwriting and hands-on asset management. As we grow back into our capital structure, our shareholders can also expect us to see us increase our use of unsecured and non-recourse funding that is not subject to mark-to-market provisions. During the first quarter, we started redeploying cash and replacing loans that paid off as latter originated $155 million of new loans, including a $41 million conduit loan and $114 million of balance sheet loans that feature a weighted average interest rate of approximately 7.3% inclusive of LIBOR floors. In the second quarter through May 5th, we closed an additional $93 million of loans, including $87 million of balance sheet loans that feature a weighted average interest rate of 5.02% inclusive of LIBOR floors. 40% of these loans were to repeat ladder sponsors, while the other 60% were closed with new sponsors who entrusted the expertise and flexibility of ladder's lending platforms to execute their transactions in this unique environment. Our deep and experienced in-house origination team continues to expand Lattice Borrower's universe by highlighting our product differentiation and flexibility. In recent weeks, transaction volumes in the broader commercial real estate market increased meaningfully as buyers and sellers benefited from both greater transparency into underwriting fundamentals and the value of properties as the country reopens. With the benefit of transparency, We currently have a pipeline of more than $900 million of additional new loans under application and in the closing process. In connection with our growth, we hired nine additional professionals across the organization. With ample cash on hand, we expect to continue to benefit from the unique environment before us as we pursue new opportunities to further expand our robust pipeline. In conclusion, We're proud of the progress we made on behalf of shareholders as we move into the next phase of our recovery at very low leverage and flush with liquidity to invest. Our business model, the same model we opened the doors of Ladder Capital with 12 years ago, proved durable during these most unprecedented and volatile times. We are now moving forward in a position of strength as we put Ladder's balance sheet to work by investing shareholder capital at attractive risk-adjusted returns in this new and dynamic environment. With that, I'll turn the call over to Paul.