Ryder System, Inc.

Good afternoon and welcome to the Ladder Capital Corp's earnings call for the fourth quarter of 2019. At this time, all participants are in a listening 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. At this time, I would like to turn the conference call over to Ladder's Chief Compliance Officer and Senior Regulatory Counsel, Ms. Michelle Wallach. Please go ahead, Ms. Wallach.

Thank you and good afternoon, everyone. I'd like to welcome you to Ladder Capital Corp's earnings call for the fourth quarter and year-ended 2019. With me this afternoon are Brian Harris, our company's chief executive officer, Pamela McCormack, our president, and Mark Fox, our chief financial officer. Brian, Pamela, and Mark will share their comments about the fourth quarter, and then we will open up the call to questions. This afternoon, we released our financial results for the fourth quarter and year-ended December 31, 2019. The earnings release is available in the Investor Relations section of the company's website, and our annual report on Form 10-K will be filed with the SEC later this week. Before the call begins, I'd like to remind everyone that this call may include forward-looking statements. Actual results may differ materially from those expressed or implied on this call, and we do not undertake any duty to update these statements. I refer you to our most recent 10-K for a description of some of the risks that may affect our results. We'll also refer to certain non-GAAP measures on this call. Reconciliation of these non-GAAP financial measures to the most comparable GAAP measures prepared in accordance with GAAP are contained in our earnings release. With that, I'll turn the call over to our president, Pamela McCormack.

Thank you, Michelle, and good afternoon, everyone. During the fourth quarter, LATTA produced core earnings of $48.6 million, or 40 cents per share, reflecting an after-tax core return on equity of 11.5%. For the full year 2019, LADA produced core earnings of $190.6 million, or $1.60 per share, covering our $1.36 per share annual cash dividend and delivering an 11.6% after-tax score return on equity. In 2019, we focused on identifying attractive investment opportunities in a competitive lending environment and further strengthening our liability structure. Our multi-cylinder business model continues to afford us with the flexibility to quickly pivot to take advantage of attractive opportunities, as well as the ability to be patient and identify the best risk-adjusted returns in the market. In the fourth quarter, we originated $858 million of loans, 54% of which were balance sheet loans, and we acquired $446 million of securities. For the full year 2019, We originated $2.5 billion of loans, 61% of which were balance sheet loans, and we acquired $1.6 billion of securities. As Brian and Mark will cover later, we continue to strengthen the right side of our balance sheet by maintaining a diversified liability structure with maturities that are long-dated and well staggered. During 2019, we made meaningful progress on our path to investment grades as we prepared for our issuance of a $750 million unsecured seven-year corporate bond offering at a coupon of four and a quarter, a landmark deal that closed in January 2020. The issuance was complemented by corporate family rating upgrades from Moody's to BA1 and Fitch to BB+, which also triggered a 25 basis point step down in the interest rate on our unsecured corporate revolving credit facility. Furthermore, since the end of the third quarter, we extended the maturity date on all of our secure funding facilities and our $266 million corporate revolving credit facility. We now enjoy an average remaining term of over four years on our secured loan purchase facilities. We continue to maintain a strong and long-standing relationship with our bank partners, several dating back to the latter founding. Through such efforts, coupled with our continued commitment to moderate leverage and a disciplined approach to investing, We are making meaningful progress towards our goal of achieving an investment grade rating. As I discuss our products in more detail, I'll begin with our conduit business, which contributed $15 million to Q4 earnings from the securitization of $421 million of loans and a private sale of $34 million of conduit loans. For the full year 2019, our conduit business contributed $39 million of core earnings from the sale of $1 billion For the first quarter of 2020, we sold $186 million of loans, $134 million into a securitization, and an additional $52 million through a private sale. Both transactions closed in February and generated $6.2 million of court gains. We do not expect to participate in any further securitizations or sale of loans during the quarter. The gain on sale realized from our conduit loan securitization business continues to complement our recurring net interest margin and net rental income. Turning to our balance sheet loan origination business, we originated $466 million of balance sheet loans during the fourth quarter, almost all of which were floating rates, with an average loan size of $23 million, a weighted average spread of 385 basis points over LIBOR, and a weighted average LTV of 68%. During the quarter, we received $454 million of payoffs, primarily comprised of floating rate loans with a weighted average spread of 537 basis points over LIBOR, resulting in a $12.3 million of net balance sheet loan originations. For the full year 2019, we originated $1.5 billion of predominantly floating rate balance sheet loans with an average loan size of $21 million a weighted average spread of 403 basis points over LIBOR, and a weighted average LPV of 69%. During 2019, our real estate equity portfolio continued to provide consistent net rental income from long-dated cash flows that contribute to our recurring earnings. At quarter end, we had $1.3 billion of real estate investments on an underappreciated basis, comprised primarily of net lease properties to credit tenants. During the fourth quarter, we completed the sale of our last remaining condominium unit at Veer Towers in Las Vegas. Our $119 million investment in Veer Towers resulted in a net profit of $52 million and generated a 23.5% IRR life to date. As we look ahead in 2020, we will continue to manage our real estate equity investments and contemplate the harvesting of embedded value in the portfolio. In our securities segment, In the fourth quarter, we acquired $446 million of highly rated securities, and for the full year 2019, our acquisitions totaled $1.6 billion. As of December 31, 2019, our securities portfolio totaled $1.7 billion, up from $1.4 billion at the end of the fourth quarter of 2018. In summary, we were pleased to end the year characterized by strong earnings and steady loan origination and investment activity. We are also pleased to start the new year as a Double B Plus company with a best-in-class capital structure. With that, I'll now turn the call over to Mark Fox, our Chief Financial Officer.