Title

Presentation

Ladder Capital Corp misses on earnings expectations. Reported EPS is $0.2 EPS, expectations were $0.22.

Operator: Good morning and welcome to Ladder Capital Corp’s Earnings Call for the First Quarter of 2025. As a reminder, today’s call is being recorded. This morning Ladder released its financial results for the quarter ended March 31, 2025. 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.

Pamela McCormack: Good morning. During the first quarter, Ladder generated distributable earnings of $25.5 million, or $0.20 per share, for return on equity of 6.6% with modest adjusted leverage of just 1.4 times. We remain pleased with Ladder’s positioning in 2025 following our strong performance in 2024. Over $1.7 billion or 51% of our balance sheet loans paid off in 2024, marking the highest annual payoff volume in Ladder’s history with nearly $600 million of proceeds from loan payoffs in the fourth quarter alone. While the timing of these payoffs temporarily muted earnings, reinvestment momentum is now building. Getting paid back is the most important part of the mortgage business and we’re excited to redeploy the liquidity generated from loan payoffs into new loans at lower reset basis that better reflects current market conditions.

During the first quarter, we originated $329 million in new loans and acquired $521 million in AAA securities, bringing our total first quarter investment activity to over $800 million. Our disciplined model has firmly established our position as a leading middle market focused commercial real estate finance REIT. Over the past several years, we have consistently delivered strong earnings, preserved book value, achieved record loan payoffs, avoided material losses, enhanced and extended our liability structure, and maintained the highest credit ratings in the sector, all amid a challenging macroeconomic backdrop. The strength of our platform was most recently evident through the return on equity Ladder generated in 2024, one of the strongest in the sector.

As we look ahead for the remainder of 2025, we recognize the continued possibility of market volatility and uncertainty. However, with substantial liquidity, modest leverage, and a robust balance sheet, including one of the lowest cost capital in our space, we’re well prepared to navigate these challenges and capitalize on the opportunities they may create. Enhanced liquidity and credit ratings as of March 31, 2025, Ladder had $1.3 billion in liquidity, including $480 million or over 10% of total assets comprised of cash and cash equivalents. 83% of our asset base was unencumbered as of quarter end and 72% of Ladder’s debt was comprised of unsecured corporate bonds. Ladder remains on positive outlook from both Moody’s and Fitch, with ratings just one notch below investment grade while S&P upgraded our credit rating by one notch in 2024.

The recent expansion and upsizing of our $850 million unsecured corporate revolving credit facility, coupled with our $500 million unsecured bond issuance in 2024 represent meaningful progress in our shift towards unsecured debt as our primary funding source, an important milestone on our path towards potential investment grade ratings. Loan portfolio overview, as of March 31, 2025, our loan portfolio stood at $1.7 billion, representing 38% of total assets, with a weighted average yield of 8.7%. Our future funding commitments remain minimal, totaling just $40 million. During the first quarter new loan originations outpaced payoffs. We received $181 million in loan payoffs, including the full repayment of nine loans. In contrast, we originated $329 million of new loans consisting of a $64 million fixed rate conduit loan with a coupon of 6.8% and $265 million in balance sheet loans at a weighted average spread of 394 basis points.

Notably, 74% of these originations were backed by multi-family or industrial assets. Additionally, our pipeline continues to grow with approximately $250 million in new loans currently under application. Given the robust payoffs achieved in 2024, we expect muted payoffs for the remainder of the year. Asset repositioning and risk management during the first quarter, we placed two more loans totaling $38.7 million on non-accrual status, a $13.7 million hotel loan and a $24.9 million office loan. Overall, our non-accrual loan balance represents only 2.6% of our assets. We did not take any impairments this quarter and our CECL reserve remained at $52 million as of March 31, 2025. We continue to believe this reserve is sufficient to cover any potential losses we may incur, highlighting the strength of our underwriting and asset management which remain a core driver of our success.

Consistent carry income from our real estate portfolio. Our $892 million real estate portfolio generated $12.2 million of net operating income during the first quarter. The portfolio primarily consists of net leased properties with long-term leases to investment grade rated tenants. In addition, we sold one net leased property generating a $900,000 gain in distributable earnings during the quarter. Growing securities portfolio, during the first quarter we acquired an additional $521 million in AAA rated securities at a weighted average unlevered yield of 5.79%. As of March 31, our portfolio totaled $1.5 billion with a weighted average unlevered yield of 5.67%, primarily comprised of AAA rated securities. As Brian will cover in more detail, we continued to invest in securities during the second quarter as spreads widened, ensuring stable earnings and enhanced liquidity for Ladder with the entire portfolio remaining unlevered.

2025 outlook, Ladder’s business plan continues to prove effective amid a highly dynamic environment shaped by persistent interest rate volatility and geopolitical uncertainty, including the reemergence of tariffs. These trade tensions have contributed to uncertainty and impacted commercial real estate demand, especially in sectors tied to global supply chains. While this volatility may dampen price discovery and deal execution, it should also present attractive opportunities for well capitalized platforms like Ladder. Our discipline, balance sheet strength and real-time market intelligence gathered from our multi-cylinder business model are crucial in enabling us to proactively navigate market fluctuations and capitalize on opportunities with the best risk adjusted returns when others may be constrained.

In conclusion, we remain highly liquid and very well situated to act with certainty and speed to deploy capital into new investments that can drive earnings growth and deliver long-term value to our shareholders. With that, I’ll turn the call over to Paul.

Paul Miceli: Thank you, Pamela. In the first quarter of 2025, Ladder generated $25.5 million of distributable earnings or $0.20 per share of distributable EPS, achieving a return on average equity of 6.6% as our balance sheet remains flush with liquidity and low leverage after ending 2024 with record payoffs. As of March 31, 2025, Ladder’s balance sheet remains strong, was primarily comprised of cash and a liquid AAA securities portfolio with room to grow leverage as we deploy our capital. As of March 31, 2025, Ladder’s liquidity was $1.3 billion comprised of cash and cash equivalents and our newly upsized and extended $850 million unsecured revolver, which remains undrawn. Total gross leverage was 1.83x as of quarter-end, as we continue to delever far from our target range of between 2x and 3x leverage.

As of March 31, 2025, 72% of our debt was comprised of unsecured corporate bonds with a weighted average remaining maturity of 3.5 years, an attractive weighted average fixed rate coupon of 5.2%. In the first quarter, we repurchased $20 million in principal value of our unsecured bonds, including $8 million of our 2025 bonds maturing this October, which now have $288 million in principal that remains outstanding. In the first quarter, we called our FL2 CLO as it continued to amortize. In total in the first quarter, we repaid $323 million of secured CLO debt. As Pamela noted, Ladder remains on positive outlook one notch from an investment-grade credit rating with two rating agencies. Ladder is currently running a balance sheet within many of the investment-grade metrics of the rating agencies.

Given our long track record as disciplined and prudent manager of capital, we are hopeful we will become an investment-grade rated company in the near-term. As of March 31, 2025 for unencumbered asset pool stood at $3.7 billion or 83% of total assets. 85% of this unencumbered asset pool is comprised of first mortgage loans, securities and unrestricted cash and cash equivalents. As of March 31, 2025, Ladder’s undepreciated book value per share was $13.66, which is net of $0.41 per share of CECL general reserve established. In the first quarter of 2025, we repurchased 71,000 shares of our common stock at a weighted average price of $11.42 per share. As of March 31, 2025, $66.8 million remains outstanding on Ladder’s stock repurchase program. Subsequent to quarter-end, in April, Ladder’s Board of Directors approved an increase to Ladder’s share buyback authorization to $100 million.

In the first quarter, Ladder declared a $0.23 per share dividend which was paid on April 15, 2025. As we continue to deploy the liquidity we’ve amassed through successful payoffs in 2024 and begin to prudently add leverage to our delevered balance sheet, we are hopeful we return to consistent dividend coverage in the coming quarters. As Pamela discussed our performance in detail, I will highlight a few additional points regarding the performance of each of our segments from the first quarter. As of March 31, 2025, our non-accrual loan balance was $116 million across four loans. Our CECL reserve was $52 million or $0.41 per share as I previously mentioned. We believe this reserve level is adequate to cover any potential loss in our loan portfolio, including consideration of the continued macroeconomic shifts ongoing in the global economy.

As of March 31, 2025, the carrying value of our securities portfolio is $1.5 billion, up 37% from year-end with a weighted average yield of 5.67%. As we continue to rotate capital out of T-bills and into AAA securities while we allow for our loan pipeline to build. As of March 31, 2025, 99% of the securities portfolio was investment grade rated with 96% being AAA rated. As mentioned, the entire portfolio of predominantly AAA securities unencumbered and readily financeable, providing an additional source of potential liquidity complementing the $1.3 billion of same day liquidity we maintain. Our $892 million real estate segment continued to generate stable net operating income in the first quarter of 2025. The portfolio includes 149 net lease properties, primarily investment grade credits committed to long-term leases with a weighted average remaining lease term of 7.5 years.

In the first quarter, we sold one net lease property for $13 million of proceeds, generating a $0.9 million gain for distributable earnings and a $3.8 million gain for GAAP, which includes the recapture of previously recorded depreciation and amortization expenses. In conclusion, looking back over the five years since the onset of COVID-19 in March of 2020, Ladder has maintained a remarkably steady book equity of approximately $1.5 billion. We believe this is a testament to our long held focus on principal preservation first and return on equity second with a consistent strategy of financing our three core businesses primarily with unsecured debt and modest leverage. For further details on our first quarter 2025 operating results, please refer to our earnings supplement which is available on our website and Ladder’s quarterly report on Form 10-Q, which we expect to file in the coming days.

With that, I will turn it over to Brian.

Brian Harris: Thanks, Paul. At the end of 2024, we held about $1.3 billion in cash and T-Bills following a high volume of loan payoffs in the second half of the year. In the first quarter of 2025, we began to deploy that capital into new investments in a post-pandemic, post-election, higher interest rate environment. As the year began, we felt like loan requests coming out of the refi channel were unattractive and largely relating to older properties with broken business plans with too much existing leverage in place. We tried to focus on originating mortgage loans, on new acquisitions and on newer properties where we could find them. By the end of the first quarter, we were seeing much more attractive lending opportunities with acquisitions becoming more common along with newly built multi-family units coming off construction loans and in their initial lease up phase.

We were pleased to have originated $265 million of first lien balance sheet loans at credit spreads ranging from 270 basis points to 700 basis points and averaging 394 basis points over one month SOFR. We also originated a $64 million fixed rate mortgage that we plan to securitize at some point this year, when we accumulate enough of these kind of fixed rate loans to participate in a conduit securitization. This loan was a refinance of a $76 million loan we made to the same sponsor 10 years ago. Further investments in the first quarter included the addition of $521 million of AAA securities and as volatility gripped capital markets as April began, we added over $160 million more of AAA securities so far this month. For the remainder of the year, we expect to favor more investments in loans, but when volatility causes spikes in credit spreads, as it did in early April, we benefit from the ability to pivot and add more highly rated liquid securities to our inventory.

In short, we expect to add similar assets in the quarters ahead with a preference for higher yielding loans versus securities. On the right side of the balance sheet, we called one of our two CLOs issued in 2021 after payoffs in the pool of mortgage loans eliminated the A class. Overall, secured debt was paid down by $346 million in the first quarter. If market volatility decreases, we hope to issue another corporate unsecured bond as summer approaches. But I would note that with an undrawn revolver of $850 million and $1.5 billion of unlevered securities, we are under no pressure to issue any new debt and will only do so if we believe conditions are attractive. To wrap things up today, looking forward, we expect the treasury curve to steepen with short-term rates falling while longer term rates will be rising.

This is not a great scenario for the overall economy as savers earn less interest and cost to service most forms of debt increase. We believe this scenario should be supportive of a larger opportunity to participate more meaningfully in conduit securitizations. While it has been a while since we had meaningful earnings contribution from our conduit business, owing in part to an inverted yield curve that persisted for years. This product is the highest ROE product in our product mix and we would welcome the return of the conduit business at Ladder. We expect the Fed will start to cut short-term rates in the near-term primarily because of where we see the two-year treasury yield versus the Fed funds rate that the Fed controls. We believe the long end of the treasury curve will rise as inflation picks up and the deficit increases.

While such rise would generally not be a great sign for the economy, we believe it would be an environment that an operation like ours can thrive in, given the strength of our balance sheet and overall liquidity position. Thanks for listening today. I think we can take some questions now.

Operator: Thank you. [Operator Instructions] Our first question is from Randy Binner with B. Riley. Please proceed.

Randy Binner: Hey, thanks. I guess, I’ll start on the origination activity which was positive in the quarter and the blended 394 basis point spread you noted, but it was pretty wide like 270 by 700 I think. And so the question is, we kind of thought of over kind of plus 300 is a good level of where you’re able to put money to work. Was there exceptionally good activity in the first quarter that had that elevated or can we think like three – high 300s is where loan originations money can be put to work this year.

Brian Harris: Okay, Randy, thank you. This is Brian. The quarter – as you can imagine with all the volatility that commercial real estate’s been going through in the last few years, not since the inauguration. There are difficult situations out there. There are lenders that want to be paid off and might be willing to take a discount they weren’t willing to take a while ago. There are also a lot of acquisitions going on at different reset prices. And I think what happens sometimes in markets like that – I’ll call it, special situations, they always pop-up once in a while. But I would expect to see more coming out of a downturn. And sometimes what’s very important is that you move quickly. And when someone is buying something that they feel is very cheap and they want to move fast on it, sometimes they’re not overly worried about what the rate is as long as you get them to the closing very quickly.

So there were some situations like that and we’re – because we hold things on our balance sheet and we’re not beholden to BP’s buyers or rating agency subordination levels, we can pretty much just make a credit decision. And because we’re all in one house and we don’t – there’s no third-parties outside the building making the determination, I think we can drive a premium cost once in a while on yield to us. And also the one thing I’ve been noticing as we said was, we seem to be looking at a whole lot of brand new multifamily properties that are coming off construction loans and in lease up. That market is $225 million to $275 million and depending on what state you’re in and what the leverage point is. So we do – that is the most prevalent product we’re seeing financing opportunities for.

But I don’t think I would try to indicate to you we’re going to start being at $250 million to $270 million most of the time because I do think that we will continue to see barbelling situations pop up. And I also hesitate to draw too many conclusions around a sample size of $200-change million, $260 million because one loan could really swing things around a little there. But this is the kind of market where you will see opportunities to receive premium pricing for your liquidity and speed. So hope that answers.

Randy Binner: Yes, that’s helpful. Just one quick clarification or follow up is the – I think of that origination in the quarter there was a percentage that was multifamily and industrial. I just I missed that. How much of it was in those two classes?

Paul Miceli: I think they said 74% but I’m not sure. Craig, do you have – Adam, if you know the answer. Yes, 74%. The old man got it right.

Randy Binner: Super. Okay. Thanks. Appreciate it.

Operator: Our next question is from Jade Rahmani with KBW. Please proceed.

Jade Rahmani: Thanks very much. I was wondering if you expect origination to maintain or exceed the pace that you generated in the first quarter.

Paul Miceli: I would expect them to exceed it.

Jade Rahmani: Okay. Has there been any slowdown? I think you may have alluded to this post quarter end?

Paul Miceli: Slowdown in which part of the python? Is a part where they’re assigning applications and posting deposits or closings or securitizations? Because there’s definitely been a slowdown in securitizations with all the volatility. However, we were not looking to participate in anything anyway. But on the origination side, I think that they’re like many businesses, a lot of borrowers are kind of freezing until they get a sense as to what’s going on here. And at 10 o’clock in the morning it looks one way and at 3 o’clock it looks different. So there that will dampen activity. But coming off of what we’ve gone through in the last two years where effectively we’re an asset management operation trying to get capital back in the building, wildly successful in getting paid off.

Then we turned on the jets the other way and started making investments of over $800 million in the quarter. So while spreads have been widening out, I haven’t seen a fall off in activity. But it’s not hard to see an acceleration of activity when you’re originating $300 million in a quarter. I would expect us to originate in excess of that. So it was really a start as opposed to average quarter I think. So I think you can expect us regardless of the volatility in the space, I mean things can go too far. But I think in general you’ll see these numbers going up as we – and we’re planning to migrate out of those securities that we purchased into the loan platforms.

Jade Rahmani: Thank you. How are you thinking about the net lease portfolio longer term? Do you plan to grow it? Do you plan to sell, continue to sell down properties before leases come due? Is there a core set of the portfolio where you will hold the properties even as lease maturity approaches? Just overall, what are your views regarding that portfolio?

Brian Harris: We actually have a very non-proprietary view of holding onto those assets. They’re for sale every day one and all, and oftentimes people will call us and sometimes if it’s a small asset it’ll be somebody who knows the neighborhood. I think we sold one supermarket in Oklahoma and it isn’t because we put it up for sale and marketed it. We answered the phone. And it was somebody who had purchased another supermarket from us previously. So nice easy process and it added a little bit to earnings and got some – it proves out that gap in book value from what the undepreciated book value number. We are usually in active discussions on people who want to buy those things. Those conversations take place more when the stock market is higher for strange reasons.

But with stocks falling, people are less apt to be doing things. But I want you to know that, we’re not actively managing trying to sell it. We’re prepared to hold all of them. And when we make that purchase there’s always a price where we target a sale. In fact, the day we close, we have a targeted sale. We have a date and a price that we think we’re going to sell it at. But after we write that down, we don’t on that day put the property up for sale at that price. We just kind of use it as a guideline as to if we get a bid here. Why don’t we try this? Because we’re not in any need of capital. There’s no active attempt to sell things. Happy to add to that portfolio. Happy to grow it. But I think I’ve said, on numerous calls like this that will take place more frequently in a steep yield curve where you can borrow money at lower the short end of the curve and purchase long-term cash flows on the long end of the curve.

That creates a wonderful arbitrage. So we’re not there yet. So we’re not eyeing anything. There have been a couple of triple-net portfolios that have come across our desks recently, but we’re not active there. But I suspect that portfolio will probably go down just a bit in the next two quarters and I think it’ll probably go up after that. But precedent being the yield curve is a little steeper.

Jade Rahmani: Thank you very much.

Operator: Our next question is from Steven DeLaney with Citizens JMP Securities. Please proceed.

Steven DeLaney: Hey, good morning, everyone. So Brian, interesting, the tenure [ph], your comments about the steeper curve and it making that more attractive for net lease. So well, we’re down six basis points today to 432 [ph] on the tenure. In your crystal ball like over the next six months where do you think – where do you think it could rise to and what are you looking for to get to take advantage of it do you need up 50 basis points? Or is it something more modest than that? Thank you.

Brian Harris: It actually Steve, rather than trying to figure out I think the tenure is going to go higher first of all because the U.S. has a massive deficit and they’re going to have to fund it. And so much dollars are going into interest now that you’re old enough at this point to remember crowding out. So when the government is borrowing an enormous amount of money, there’s less credit available for people who want to do other things that are a little more productive than paying interest. So I think the 10 year will go higher, I also think the short end will go lower. We’re seeing an indication that right now if you look at where the two-year versus one month SOFR, might remember a couple of years back where we got out in front of a scenario where we thought rates were going to rise rapidly.

And on the short end and we – I remember the day we were on a phone call, I think we had just borrowed money for seven years at four and a quarter and we were being chastised for paying too much interest because LIBOR was at 25 basis points. And we indicated we would play the long game there as opposed to where things were right now. And we felt LIBOR was going to go up dramatically because the two-year was rocketing higher. And so as much as the TVs like to talk about Trump and Powell and arguments and who does what. At the end of the day the two-year is driving where that short end is going to go. And so I am now of the opinion that Powell will cut rates and not because I think he wants to satisfy Trump. I think that Powell will cut rates because the two-year is going to force him into it.

So the – I think you can expect a lower short end and a higher long end which will create the differential is what we worry about there. So I don’t care how much the two-year goes down, if the 10-year goes up a lot, if the two-year stays right where it is, it’s okay. But I don’t think that’s what’s going to happen. I do think that we’re in for a little bit of a slowdown here and that should precipitate the Fed to make a move lower. And I think that’s what all the forward curves are saying anyway. The real question is how much of a stomach does the administration have for a 10-year at 5% or 4.75%? Throwing darts, not what I do for a living, I would probably tell you the 10-year probably get up around 4.75%

Steven DeLaney: Yes. Optically that’s a little more attractive I think for, especially for the real estate market than their five handle. You – obviously CMBS, RMBS, non-agency, of course, things have blown out right a much wider. You put some money to work. Interestingly on that and I mean, I guess you’re looking when you step in there, what are you looking at five- to seven-year kind of durations? And how do you protect yourself if you add a lot of CMBS – fixed rate CMBS against the steepening? Do you put some swaps on? How do you take advantage of the CMBS basis widening without taking interest rate risk?

Brian Harris: I would say that what we call the CMBS, the mortgage-backed securities business covers a lot of different products and CMBS has widened really with the rest of the world. And if you take a look at some of the residential mortgage REITs, they’ve been suffering some book value declines, spreads are blowing out and they keep issuing shares to buy more. So these are at very historically wide credit spreads. And so the way I was taught a long time ago, the best hedge is at the price you buy it at. And so the way we protect ourselves in an environment where we have said for a while we suspect, rates will go up if the government doesn’t get the tenure [ph] at the – sorry, I can’t remember the word now, the deficit at least under some kind of a game plan.

And so we don’t really own a lot of tenure instruments except fixed rate that we plan on securitizing. So right now we own very little of that. And what we do have on, we do hedge with swaps, we don’t ever hedge one to one. The – so we own that one loan that we did at 6.8%. So we have that hedged about 50% right now. But that’s a daily occurrence. We move that around often. The way we really avoid a credit blowout and a lot of volatility is you buy floating rate instruments that are two-year AAA’s. And that leads you to another part of the mortgage backed security world, which is CLOs. And the CLOs that are out there right now, there’s been a slowdown in production of these also where people are just saying, they’re going to wait till volatility comes down.

All that translates to is I don’t like where I have to sell bonds. So, and that – and you hear us expressing a view that we like buying bonds here, which is what you would expect. So, the way we don’t leverage ourselves aggressively at all. In fact, I think we have $1.5 billion of AAA securities with no leverage at all. So, we finance ourselves as we’re now at a mature phase of this company where we finance ourselves through long-term corporate debt that does not have mark-to-market in its process. So those are all vehicles that hedge you against volatility.

Steven DeLaney: Appreciate the comments, Brian. Sounds like you’ve got some attractive opportunities here over the next quarter or two. Thank you.

Brian Harris: Thank you.

Operator: [Operator Instructions] Our next question is from John Nicodemus with BTIG. Please proceed.

John Nicodemus: Good morning, everyone. I was looking at your Slide 6 in the latest supplemental, just sort of the percentages between the different assets within your portfolio. Obviously, you’ve seen cash come down a bunch, securities go up a bunch and then also loans start to creep back up with loan portfolio growth returning. I’m just curious kind of how you’re envisioning this slide or just this allocation proceeding as the year goes on, given the $160 million of AAA is being added in April alone? Also sounds like originations are going to keep ramping? And then based on what you’re seeing right now, do you have a sort of steady state mix that you’re looking at for the different percentages allocated to each asset class? Thanks.

Brian Harris: Sure. We don’t have any game plan as to what concentrations we want in anything. We run the company from a overarching perspective of we want to have a lot of liquidity around during, anything that’s coming, but, particularly in the volatility we’ve been seeing here. So in that scenario, we generally like having AAA securities, especially when they’re yielding if we were to lever them, and as I said, we have not, but we’re competing with people who do leverage them. So we have to be mindful of that. But if we were to take our $1 billion of AAA securities and borrow $900 million, the $100 million left would probably be yielding in the 12, 13, 14 area depending on what the price was that we bought the securities at.

But that to me is – that’s an episodic relationship. If things tighten, we will sell all of the securities, and if things really widen a lot, then we’ll buy a lot more of them. But for the most part we worry. We know what our financing cost is. It doesn’t move around a lot because it’s fixed rate, primarily 72% of our assets. Our liabilities are fixed rate corporate debt. So I think our cost of funds there is 5.3% and right now we’re not having any trouble at all, accomplishing an arb there. So but I would expect because we’re now coming out if the country goes into a recession and I think it might, I don’t think it’ll be a horrific one, but I think it might go into one. Commercial real estate is still coming out of a recession, and it was in three years ago and it’s coming out first.

So we are seeing improvement in fundamentals and I think that follow people who are concerned about possibly losing their jobs there. There’s a lot less moving around and so and with when people start opening their 401(k) at the end of the quarter, they might decide to sell their house with the 3% mortgage and move to Florida. So we try to get in front of those things. But for the company having done this through many cycles, you will see more loans on our balance sheet going forward. You will see more participation in the conduit if the yield curve steepens and you’ll see less securities and less cash on our balance sheet. And the reason for the less cash. Don’t think we’re becoming cowboys. We have an $850 million revolver.

John Nicodemus: Great, that’s really helpful, Brian. I appreciate that. And then other one for me is just the origination pipeline. I know Pamela said 74% of what came in the first quarter was either multifamily or industrial. Is it a similar sort of balance you’re seeing with what you’re looking at for the rest of the year? Or is that shifting at all especially given the recent tariff news? Thanks.

Brian Harris: I think Pamela, if you want to take that one or, I’m happy to. Okay.

Pamela McCormack: Again because of the fallout right now it’s all subject to change but right now it looks like a very similar 70% multifamily contribution on what’s under app. But if we find these one-off opportunities, the barbelling that could change a little bit. But I think generally speaking I would expect it to be a majority of our origination.

John Nicodemus: Great, thanks a lot, Pamela. That’s all for me.

Operator: There are no further questions at this time. I would like to turn the floor back over to Brian Harris for closing remarks.

Brian Harris: Okay, thank you for all listening live or later and look forward to our next call. But our business plan is unfolding the way we’ve indicated it would. We migrated cash out of cash and T-bills and into securities where they’re waiting to be called upon to head for the runway as we write loans that will be higher yielding. So we look forward to having shared that with you over the following three quarters. But it looks like we’ve got ourselves in a very good position with a lot of liquidity and at a time where there’s widespreads and high rates and a lack of competitiveness in the market. So I look forward to this. And we’ll catch you next quarter.

Operator: Thank you. This will conclude today’s conference. You may disconnect your lines at this time, and thank you for your participation.