Ladder Capital NYSE: LADR reported higher earnings and active capital deployment in the second quarter of 2026, with management emphasizing a continued shift toward higher-yielding balance sheet loans, steady book value and opportunistic share repurchases while its stock trades below book value.
President Pamela McCormack said Ladder generated distributable earnings of $30.8 million, or $0.24 per share, in the quarter ended June 30, with adjusted leverage of 2.3 times. She said the company’s business model is “performing well,” but that its stock continues to trade at a “meaningful discount to book value.”
McCormack said management sees three primary ways to narrow that discount over time: rotating capital into higher-yielding loans, generating gains across its securities, real estate and conduit lending businesses, and repurchasing shares when they trade below book value. She also noted that the company’s dividend yield was above 9%.
Loan Growth Remains Central to Strategy
Ladder originated $1.2 billion of new loans year to date, and McCormack said the loan portfolio has grown 75% over the trailing 12 months. Balance sheet loans now represent approximately 50% of total assets, a share management expects to continue rising.
McCormack said 85% of Ladder’s loan portfolio was originated in the past two years at conservative loan-to-values on “reset bases,” which she described as recently underwritten loans rather than a legacy portfolio carried at peak-cycle values.
In the second quarter, Ladder made more than $800 million of new investments, including more than $550 million of new loans at a weighted average yield of 7.2% and $333 million of AAA-rated investment-grade securities at a weighted average yield of 5.15%. McCormack said the investments are predominantly floating rate, while the company’s liability structure is largely fixed rate, positioning earnings to benefit if rates rise.
“Every dollar we rotate from securities yielding approximately five percent into floating rate first mortgages yielding over seven percent picks up about 200 basis points of income on that capital,” McCormack said.
Second-quarter loan originations included a $268 million loan tied to 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. McCormack said the loan was made at a 62% loan-to-cost on a reset basis to a repeat borrower.
Management said origination momentum has continued into the third quarter, with approximately $500 million of new loans under application and in closing. McCormack said payoffs are expected to remain light through year-end, supporting net portfolio growth in the second half of 2026.
Balance Sheet, Liquidity and Buybacks
Chief Financial Officer Paul Miceli said Ladder ended the quarter with $1.1 billion of liquidity, including same-day capacity under its unsecured revolver and cash. Unsecured debt represented 67% of total debt, and the company’s unencumbered asset pool represented 73% of total assets.
Miceli said Ladder fully drew the $275 million unsecured term loan it closed in the first quarter, priced at 140 basis points over SOFR. He also highlighted the company’s $1.25 billion unsecured corporate revolver, which provides funding flexibility at SOFR plus 125 basis points.
Subsequent to quarter-end, S&P revised its outlook on Ladder to positive, following an upgrade to BB+ in January. Miceli said an upgrade to investment grade from S&P would align that rating with Moody’s and Fitch, where Ladder is already investment grade.
Ladder’s book value per share was $13.44 as of June 30, net of a $0.37 per share CECL reserve. The company repurchased $8 million of common stock in the quarter, or 800,000 shares, at a weighted average price of $10.03 per share, which Miceli said represented a 25% discount to book value. Year to date, Ladder has repurchased $21 million of common stock, or 2.1 million shares, at a weighted average price of $10.10. As of June 30, $92 million remained under its repurchase authorization.
The company declared a $0.23 per share dividend in the second quarter, paid July 15.
Gains From Multiple Business Lines
McCormack said Ladder’s “multi-cylinder” strategy continued to contribute to earnings through gains from securities, real estate and conduit lending, though she cautioned that such gains can be uneven by quarter.
During the quarter, Ladder generated approximately $4.1 million of gains across its three segments: $1.8 million from securities sales, $1.7 million from real estate equity and $600,000 from the conduit business.
The company’s securities portfolio totaled $1.9 billion at quarter-end, representing 33% of total assets. Miceli said 99% of the portfolio was investment grade and 96% was AAA-rated, with a weighted average duration of about three years. Approximately $925 million of the securities portfolio was unencumbered.
Ladder’s $1 billion real estate portfolio generated $18 million of net operating income in the second quarter. McCormack also cited a $13 million distribution from a cash-out refinancing of a Manhattan office joint venture equity investment made in 2024, which produced a $1.7 million gain to distributable earnings. She said occupancy at that property increased to 94% from the time of acquisition, with net operating income rising more than 200%.
Credit and Sector Commentary
On credit, Miceli said Ladder added one loan to non-accrual status in the quarter, secured by an office asset in Minneapolis with a carrying value of $13.4 million. He said the company anticipates resolving the loan by the fourth quarter. Ladder’s CECL reserve remained steady at $47 million, or $0.37 per share.
Miceli said the company resolved one loan through foreclosure during the quarter: an $8 million loan secured by an office property in Birmingham, Alabama, which Ladder now owns at $30 per square foot. He said Ladder plans to stabilize the asset and maximize value for a potential future sale.
Chief Executive Brian Harris said Ladder’s loan portfolio is growing as planned, funded by unsecured liabilities and the sale or paydowns of unencumbered securities. He said the company expects the rotation into higher-yielding first mortgage loans to continue through year-end.
Harris also said Ladder expects to issue additional unsecured corporate debt within the next six months, when market conditions are attractive, to refinance its 4.25% bonds maturing in early 2027. He added that the company does not need to issue debt immediately because of its undrawn corporate revolver.
Addressing office exposure, Harris said Ladder appears likely to receive a full return of capital on the five largest office exposures it identified in late 2022, though he noted there are no guarantees. He said the company has “fared better than most” through the difficult period for office real estate, contributing to lower charge-offs and relatively stable book value.
Management Discusses Rates, Originations and Investor Outreach
During the question-and-answer session, Harris said Ladder typically sells securities that are near payoff first when raising cash for new loans, and that AAA floating-rate securities provide rapid liquidity, with cash generally available 24 hours after sale.
Asked about origination levels, Harris said Ladder is set up to originate roughly $400 million to $500 million per quarter, though management is comfortable with results above or below that range depending on opportunities. McCormack later said investors could model roughly $400 million to $500 million of quarterly originations at about a 300-basis-point spread, subject to asset mix and closing timing.
Harris said higher rates can deter some borrowers but may initially push borrowers under application to close quickly. He said Ladder has become more selective and firmer on pricing and credit conditions as its inventory has grown.
On multifamily, Harris said rent growth remains muted and that some Sun Belt markets, including Austin, have experienced oversupply. He said Ladder continues to favor newer properties with lower leverage and sponsors that have demonstrated resilience through recent market stress.
Harris closed the call by saying management is turning more attention to the company’s stock price and investor base after strengthening the liability side of the balance sheet. He said Ladder aims to reach investors who typically buy lower-yielding investment-grade property REITs, regional banks, Treasury bills or money market funds, highlighting Ladder’s investment-grade profile and dividend yield.
About Ladder Capital (NYSE:LADR)
Ladder Capital Corp NYSE: LADR is a publicly traded commercial real estate finance company structured as a real estate investment trust. The firm specializes in originating, acquiring and managing a diversified portfolio of commercial mortgage loans, subordinate financings such as mezzanine loans and B-notes, and equity investments. In addition to direct lending activities, Ladder Capital invests in and manages commercial mortgage‐backed securities (CMBS) and commercial real estate collateralized loan obligations (CRE CLOs), providing financing across a range of property types including office, retail, multifamily, industrial and hospitality assets.
Since its inception in 2008, Ladder Capital has developed a platform that supports both balance-sheet lending and structured securitization.
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