Ladder Capital Corp

Good morning and welcome to Ladder Capital Corp's earnings call for the second quarter of 2026. As a reminder, today's call is being recorded. This morning, Ladder released its financial results for the quarter ended June 30th, 2026. 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 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 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 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. Ladder had a strong second quarter with robust origination activity and continued earnings growth. We generated distributable earnings of $30.8 million or 24 cents per share with modest adjusted leverage of 2.3 times. Ladder's business model is performing well, yet our stock still trades at a meaningful discount to book value. a value we feel confident in and one that has remained stable throughout the cycle. We have three levers that should help narrow that discount over time. Combined with a dividend yield of over 9%, closing that gap would put a total return potential above 30% from here. First, continued rotation to higher yielding loans builds earnings power. Our investment grade balance sheet gives us the liquidity and financial flexibility to continue rotating capital into loans without compromising on credit and our stable book value reflects that discipline. Second, generating gains from sales across our multi-cylinder strategy from securities, real estate and conduit loans continues to be part of our playbook and a source of earnings we don't think is fully reflected in our valuation today. And third, with our stock price currently trading below book value, every share we repurchase adds to book value per share. A lever we'll use opportunistically alongside loan growth. I'll explain how you're already seeing progress in each of these areas. Rotating into loans. Year to date, we have originated $1.2 billion in new loans, with our loan portfolio growing 75% over the trailing 12 months. Balance sheet loans now make up approximately 50% of total assets, and we expect that share to continue to climb. 85% of our loan portfolio has been originated in the past two years. at conservative loan-to-values on reset basis resulting in recently underwritten loans, not a legacy book carried at peak cycle values. That rotation is showing up in the results. Our net interest margin has trended higher year over year as we've rotated out of lower yielding securities and replaced legacy loans with these new, recently originated ones, even as all-in rates on new originations have come down. In the second quarter, we made over $800 million of new investments, over $550 million in new loans at a weighted average yield of 7.2% and $333 million in AAA investment grade rated securities at a weighted average yield of 5.15%. These investments are predominantly floating rate while our liability structure is largely fixed rate. So higher rates from here should benefit earnings. Every dollar we rotate from securities yielding approximately 5% into floating rate first mortgages yielding over 7% picks up about 200 basis points of income on that capital, which would flow directly through to earnings. Notably, our second quarter loan originations included a $268 million loan for the acquisition of a Class A office and retail building in Midtown Manhattan, along with a $10 million or 6% equity co-investment in the property. The loan was made at a 62% loan to cost on a reset basis to a repeat borrower. Origination momentum has continued into the third quarter, with an active pipeline of approximately $500 million of new loans under application and in closing. With payoffs expected to stay light through year-end, we expect net portfolio growth to build each quarter for the remainder of 2026. Overall transaction volume across the market has picked up, broadening our opportunity set as a lender, and we continue to canvas for the best risk-adjusted returns. Our primary focus remains middle market income producing collateral, mainly multifamily and industrial. On office, to be clear, we're not making a directional bet on the sector. But in select markets, we're finding compelling opportunities where leasing momentum has returned and basis has reset sharply. We favor cities with low crime rates and a return to in-person work, and we underwrite each of these loans on its own reset basis, not on a view of office broadly. Supplementing carry with gains. Gains from our multi-cylinder business strategy, security sales, real estate, and conduit can be lumpy from quarter to quarter, but they've been a consistent contributor to earnings by design since our founding. Because of that consistency, Ladder's better evaluated year over year rather than quarter to quarter, a distinction we believe gets lost in how our stock is valued today. Our $1.9 billion securities portfolio, representing 33% of total assets, is predominantly AAA rated and has served as a primary source of capital as our loan origination activity accelerates. During the quarter, we reduced our securities portfolio with net sales producing $1.8 million in gains. As we continue to fund new loans, we expect the securities portfolio's share of total assets to contract further with the pace driven by loan origination activity, not a retreat from securities as an asset class. Our $1 billion real estate portfolio generated $18 million of net operating income in the second quarter. We also realized the $1.7 million gain to distributable earnings tied to a $13 million distribution from a cash-out refinancing of a joint venture equity investment we made in a Manhattan office property in 2024. Over the course of our ownership, property occupancy increased 52% to 94%, with NOI increasing over 200% from acquisition. Another example of unlocking value above our cost basis in select assets. This is not unique to one property. Across our real estate portfolio, we carry several assets below the value we would expect to realize, and we anticipate capturing that value as we selectively monetize positions over time. So the timing of any given sale is never guaranteed. Overall, we realized approximately $4.1 million of gains this quarter across all three of our cylinders. 1.8 million from security sales, 1.7 million from our real estate equity, and $600,000 from our conduit business. These gains are not always sizable individually, but this is our multi-cylinder business model working the way it's supposed to, earning support that builds over the year rather than any single quarter. Share repurchases. As Paul will discuss, we continue to repurchase stock at a discounted book value this quarter. Stock repurchases remain one of the more creative uses of capital available to us today, increasing book value with every share repurchased at today's market price. In closing, we can't control our stock price, but we can control many of the inputs that help drive it. An investment-grade capital structure and rising higher-quality earnings should attract a broader base of investors, including equity reholders. Supporting the kind of stock performance that would move us towards that 30-plus percent total return or shareholders that paid a yield of over 9% in the meantime. We've built a strong track record earning the confidence of a new core base of investment grade bondholders. When we issued our inaugural investment grade bond, we effectively refreshed our fixed income investor base, attracting high quality institutional buyers who bought the latter story and drove our bond spreads materially tighter. Now we're turning that same attention and effort to the equity side. Over the second half of the year, We plan on taking our story directly to current and prospective shareholders, widening the audience and candidly going to work on our stock. Looking ahead, our priorities remain unchanged. Originate high quality investments across loan securities and real estate with a particular focus on our loan segment while maintaining the credit discipline that has always defined Ladder. Management and the board remain Ladder's largest shareholder group, which keeps our incentives squarely aligned with yours, protecting principal, delivering an attractive return on equity and building long-term value for every shareholder alongside us. With that, I'll turn the call over to Paul.

Thank you, Pamela. Good morning. During the second quarter, Ladder generated distributable earnings of $30.8 million, or 24 cents per share. Our investment-grade balance sheet continues to be in a position of strength, powering our multi-cylinder strategy. We maintain modest leverage and a highly resilient unsecured capital structure with unsecured debt representing 67% of our total debt at an attractive cost of capital. As of quarter end, our adjusted leverage ratio was 2.3 times, and we maintain robust liquidity at $1.1 billion, including same-day capacity in our unsecured revolver and cash. During the second quarter, we fully drew down the $275 million unsecured term loan we closed in the first quarter, which is priced at 140 basis points over SOFR. Alongside this facility, our $1.25 billion unsecured corporate revolver continues to be a valuable asset, allowing for funding flexibility with same-day liquidity at SOFR plus 125 basis points, driving our ability to execute our capital deployment strategy. Our unencumbered asset pool represented 73% of total assets as of June 30th. 85% of this pool is comprised of first mortgage loans, investment grade securities, and unrestricted cash. These highly liquid senior secured unencumbered assets do more than expand our liquidity. They provide a high caliber asset base that directly supports our unsecured liability structure. Subsequent quarter end, S&P revised their outlook on ladder to positive, one step closer to investment grade. and the second positive rating action S&P has taken on Ladder this year, following their upgrade to WB Plus in January. The action is reflective of Ladder's strengthening balance sheet and track record of discipline, leverage, down credit management and durable, predominantly unsecured funding profile. An upgrade to investment grade from S&P would bring Ladder's credit rating in line with Moody's and Fitch, where we are already investment grade. We'd like to thank the team at S&P for their diligence and partnership throughout this process, and we look forward to continuing to build on that relationship. As of June 30th, Ladder's underappreciated book value per share was $13.44, which is net of $0.37 per share of CECL Reserve established. In the second quarter, we repurchased $8 million of common stock, or 800,000 shares, at a weighted average share price of $10.03 per share, or 25% discounts on book value. Year to date in 2026, we have repurchased $21 million of our common stock or 2.1 million shares at a weighted average share price of $10.10 per share. As of June 30th, $92 million remains outstanding on our stock repurchase program. Overall, we continue to believe in our book value, and we will seek to continue to opportunistically utilize our buyback program while our stock is trading at a meaningful discount. In the second quarter, we declared a 23 cent per share dividend, which was paid on July 15th, 2026. Over time, continued rotation of capital into our loan segment, along with the earnings power of our multi-cylinder strategy, could be a tailwind to dividend coverage. Turning to credit quality. In the second quarter, we added one loan to non-accrual status, collateralized by an office asset in Minneapolis, Minnesota, with a carrying value of $13.4 million. We anticipate resolution of this loan by the fourth quarter. As of June 30th, our CECL reserve remains steady at $47 million, or 37 cents per share. We continue to believe this reserve level is sufficient to cover potential losses across our loan portfolio. During the quarter, we resolved one loan through foreclosure, an $8 billion loan collateralized by an office property in Birmingham, Alabama, that we now own at $30 per square foot. Our plan is to stabilize this asset and maximize value for a potential sale in the future. As of June 30th, our securities portfolio totaled $1.9 billion, with a weighted average yield of 5.19%. Notably, 99% of the portfolio was investment grade and 96% was AAA rated, with a weighted average duration of approximately three years, underscoring its high credit quality and overall liquidity. As of quarter end, approximately 50% or $925 million of our securities portfolio remain unencumbered, complementing our $1.1 billion of same-day liquidity. We believe this combined firepower reinforces the strength of our balance sheet and positions ladder to organically fund loan origination to drive future earnings growth. Our $1 billion real estate segment continued to generate stable net operating income in the second quarter. The portfolio includes 149 net lease properties comprised primarily of investment grade credits committed to long-term leases with an average remaining lease term of 6.2 years. or further details of our second quarter 2026 operating results, please refer to our earnings supplement and our investor presentation, both available on our website, as well as our quarterly report on Form 10Q, which we expect to file in the coming days. With that, I'll let Brian take it from here.