Ladder Capital's Q1 2025: Key Contradictions in Loan Spreads, Multifamily Yields, and Dividend Policy

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Financial Performance and Liquidity:
- Ladder Capital Corp generated distributable earnings of $25.5 million or $0.20 per share for a return on equity of 6.6% with modest adjusted leverage of 1.4x.
- The company ended the quarter with $1.3 billion in liquidity, including $480 million in cash and 10% of total assets.
- This financial strength is attributed to significant loan payoffs in 2024, which were reinvested into new loans and securities, enhancing liquidity and credit ratings.

Loan and Securities Portfolio Activity:
- Ladder originated $329 million in new loans and acquired $521 million in AAA-rated securities during the first quarter of 2025.
- The total investment activity for the first quarter exceeded $800 million.
- The disciplined investment strategy focused on middle-market commercial real estate finance, benefiting from attractive lending opportunities and favorable yields in AAA securities.

Asset Repositioning and Risk Management:
- Ladder placed two more loans on nonaccrual status, totaling $38.7 million, representing 2.6% of assets.
- The company maintained a CECL reserve of $52 million, indicating a focus on preserving book value and managing risk through robust underwriting and asset management.

Dividend and Shareholder Returns:
- Ladder declared a $0.23 per share dividend, consistent with its commitment to maintaining shareholder value despite a decline in dividend coverage due to 2024 loan payoffs.
- The company is expected to return to consistent dividend coverage as it prudently adds leverage and deploys liquidity generated from payoffs.