Ladder Capital CorpLADRNYSE
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Operator: Good morning, and welcome to Ladder Capital Corp.'s Earnings Call for the Third Quarter of 2025. As a reminder, today's call is being recorded. This morning, Ladder released its financial results for the quarter ended September 30, 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 third quarter, Ladder generated distributable earnings of $32.1 million or $0.25 per share, delivering a return on equity of 8.3% with modest adjusted leverage of 1.7x. Credit performance remained stable and the quarter was marked by 3 notable developments, a significant acceleration in new loan originations, continued progress in reducing office loan exposure and the successful closing of our inaugural investment-grade bond offering. These results reflect our disciplined business model and conservative balance sheet philosophy, positioning Ladder for continued earnings growth and greater capacity to capitalize on investment opportunities across market cycles. Loan portfolio activity. Origination activity accelerated in the third quarter with $511 million of new loans across 17 transactions at a weighted average spread of 279 basis points, our highest quarterly origination volume in over 3 years. The spread reflects the mix of assets originated, which were predominantly multifamily and industrial, consistent with our focus on stable income-producing collateral. Net of $129 million in paydowns, the loan portfolio grew by approximately $354 million to $1.9 billion, now representing 40% of total assets. Year-to-date, we originated over $1 billion in new loans with an additional $500 million under application and in closing. Notably, the full payoff of our third largest office loan, a $63 million loan secured by an office property in Birmingham, Alabama, reduced office loan exposure to $652 million or 14% of total assets. Approximately 50% of the remaining office loan portfolio consists of 2 well-performing loans secured by the Citigroup Tower in Downtown Miami and the Aventura Corporate Center in Aventura, Florida. Securities portfolio. As of September 30, our securities portfolio totaled $1.9 billion, representing 40% of total assets. During the quarter, we acquired $365 million in AAA-rated securities, received $164 million in paydowns through amortization and sold $257 million of securities, generating a $2 million net gain. Paydowns and sales exceeded purchases, resulting in a modest net reduction in securities holdings this quarter. This reflects our disciplined approach to capital allocation as we did not replace certain securities that ran off, consistent with our view that spreads may widen in the mortgage market given recent volatility and the Federal Reserve's ongoing runoff of mortgage-backed securities. Consistent carry income from our real estate portfolio. Our $960 million real estate portfolio generated $15.1 million in net operating income during the third quarter. The portfolio primarily consists of net lease properties with long-term leases to investment-grade rated tenants and continues to deliver stable, predictable income. Capital structure and liquidity. During the third quarter, we closed our inaugural $500 million 5-year investment-grade unsecured bond offering at a rate of 5.5%, representing 167 basis point spread over the benchmark treasury, the tightest new issuance spread in Ladder's history. The offering was met with strong demand and the bonds have since traded tighter in the secondary market, reaching spreads as low as 120 basis points. This transaction validates the strength of our conservative balance sheet philosophy and disciplined business model. As one of our premier debt capital markets bankers noted, it also firmly planted Ladder's flag in the investment-grade market. The continued tightening of our bonds positions us for lower borrowing costs, stronger execution and improved shareholder returns. As of quarter end, 75% of Ladder's debt consisted of unsecured corporate bonds and 84% of our balance sheet assets remain unencumbered. We maintained $879 million in liquidity, including $49 million in cash and $830 million of undrawn capacity on our unsecured revolver, which provides same-day liquidity at highly competitive rates. Outlook. Ladder's unique investment-grade balance sheet, disciplined use of unsecured debt and robust origination platform positions us to capitalize on investment opportunities, while maintaining prudent credit risk management. We expect fourth quarter loan originations to exceed third quarter production. Recent credit rating upgrades and our successful inaugural investment-grade bond issuance have lowered our cost of debt and expanded our access to a deeper, more stable capital base that remains consistently available across market cycles. Over time, we expect our strong balance sheet, modest leverage and reliable funding profile to position Ladder alongside a broader set of high-quality peers, including equity REITs rather than solely within the commercial mortgage REIT space. As investors increasingly recognize the strength of our senior secured investment strategy and conservative capital structure, we believe our equity valuation will reflect this alignment. Combined with our disciplined credit risk management and ability to deploy capital with speed and certainty, these attributes reinforce our capacity to deliver strong, stable returns for shareholders across market cycles. With that, I'll turn the call over to Paul.
Paul Miceli: Thank you, Pamela. In the third quarter of 2025, Ladder generated $32.1 million of distributable earnings or $0.25 per share, achieving a return on average equity of 8.3%. In the third quarter, we closed our inaugural investment-grade bond offering of $500 million 5-year bond at 5.5%. The proceeds were partially used to call the remaining $285 million of bonds that were maturing in October and fund loan originations. As of quarter end, $2.2 billion or 75% of our debt is comprised of unsecured corporate bonds across 4 issuances with a weighted average remaining term of 4 years and a weighted average coupon of 5.3%. Our next corporate bond maturity is now in 2027. The offering strengthened our balance sheet and affirmed our commitment to the investment-grade bond market as our primary source of capital. We're encouraged by the bond's strong trading performance in the secondary market and believe our bonds offer attractive relative value to fixed income investors with [ meat on the bone ] to tighten further as the market continues to recognize Ladder's distinct long-standing investment strategy, anchored by conservative lending attachment points, AAA-rated securities and high-quality real estate equity investments. As of September 30, 2025, Ladder's liquidity was $879 million, comprised of cash and cash equivalents and our undrawn capacity of $850 million unsecured revolver. Total gross leverage was 2.0x as of quarter end, below our target leverage range. Overall, our balance sheet remains strong and primed for continued growth as our investment pipeline continues to build. As of September 30, 2025, our unencumbered asset pool stood at $3.9 billion or 84% of total assets. 88% of this unencumbered asset pool is comprised of first mortgage loans, investment-grade securities and unrestricted cash and cash equivalents. As of September 30, 2025, Ladder's undepreciated book value per share was $13.71, which is net of a $0.41 per share CECL reserve established. In the third quarter of 2025, we repurchased $1.9 million of common stock or 171,000 shares at a weighted average price of $11.04 per share. Year-to-date in 2025, we've repurchased $9.3 million of common stock or 877,000 shares at a weighted average price of $10.60 per share. As of September 30, 2025, $91.5 million remains outstanding on Ladder's stock repurchase program. In the third quarter, Ladder declared a $0.23 per share dividend, which was paid on October 15, 2025. As of today, our dividend yield is approximately 8.5% with a stock price that we believe has been pulled down by the broader market concerns around private credit. We'll note that our dividend remains stable and our asset base continues to turn over into freshly originated loans, AAA securities, high-quality real estate equity investments. With a stable earnings base complemented by our investment-grade capital structure, we believe there's ample room for our dividend yield to tighten, specifically when compared to other investment-grade REITs with similar credit ratings to Ladder. We continue to expand our investor outreach efforts now as an investment-grade company, and we look forward to further educating the market on our story. Building on Pamela's overview of our performance, I'll highlight a few additional insights to how each of our segments fared in the third quarter. As of September 30, 2025, our loan portfolio totaled $1.9 billion with a weighted average yield of approximately 8.2%. As of quarter end, we had 3 loans on non-accrual totaling $123 million or 2.6% of total assets. In the third quarter, we resolved 2 non-accrual loans, first through the payoff at part of a $16 million loan through the sale by a sponsor of 2 mixed-use properties in New York City; and the second be a foreclosure of a loan collateralized by an office property in Maryland with a carrying value of $22.7 million. No new loans were added to non-accrual in the third quarter. Our CECL reserve remained steady at $52 million or $0.41 per share. We believe this reserve is adequate to cover any potential losses in our loan portfolio, including consideration of the ongoing macroeconomic shifts in the U.S. and global economy. As of September 30, 2025, our securities portfolio totaled $1.9 billion with a weighted average yield of 5.7%, of which 99% was investment-grade and 96% was AAA-rated, underscoring the portfolio's high credit quality. As of quarter end, approximately 80% of the portfolio of almost entirely AAA securities were unencumbered and readily financeable, providing an additional source of liquidity, complementing our same-day liquidity of $879 million. In the third quarter, our $960 million real estate segment continued to generate stable net operating income. The portfolio includes 149 net lease properties, primarily investment-grade credits committed to long-term leases with an average lease term of 7 years remaining. For further information on Ladder's third quarter 2025 operating results, refer to our earnings supplement presentation, which is available on our website and our quarterly report on Form 10-Q, which we expect to file in the coming days. With that, I will turn the call over to Brian.
Brian Harris: Thanks, Paul. The third quarter was a particularly gratifying one, highlighted by the successful completion of our first corporate unsecured issuance as an investment-grade issuer. We now have access to a much larger investor base in the investment-grade market than the high-yield market where we had issued our prior 7 offerings over the last 13 years. Having access to this larger pool of capital should allow us to further optimize our liability management in the years to come. We believe that by being a regular issuer in the investment-grade corporate bond market, we will be able to lower our overall interest expense to a greater extent than what we could expect in the secured repo and high-yield markets. We prioritized getting to investment-grade ratings several years ago. So having that distinction today from 2 of the 3 major rating agencies is very satisfying, and we plan to maintain or improve our ratings over time. While Ladder has historically been grouped into a peer group of other commercial mortgage REITs, we believe we are more properly comped against other investment-grade rated property REITs who finance their operations like we do, primarily with the use of corporate unsecured debt and large unsecured revolvers. If we succeed in curating an equity investor base that views us more in line with investment-grade property REITs, we think our stock price will start to reflect a lower required dividend yield more in line with how these investment-grade property REITs with lower leverage are valued. In the fourth quarter and beyond, we expect to continue adding to our inventory of higher-yielding balance sheet loans, while staying nimble enough to pivot into securities acquisitions during periods of high volatility when these investments provide extraordinary opportunities to add safer, more liquid investments as market turbulence flares up. We are hopeful that the yield curve will steepen much more next year as the Fed makes good on market predictions of several cuts to the Fed funds rate. This in turn should pave the way for more regular contributions to securitizations. We are always on the lookout for opportunities to own more real estate, but we expect most of the lift to earnings next year to come from organic growth of our loan portfolio. We're expecting to finish this transformational year on a positive note as market conditions do appear to favor our business model as we head into 2026. We can take some questions now.
Operator: [Operator Instructions] Our first question comes from the line of Jade Rahmani with KBW.
Jade Rahmani: I'm interested to know if you're doing anything differently on the origination side from prior to the IG rating. Perhaps that has opened you up to deals that are closer to stabilization or perhaps larger in size. Clearly, the IG rating might give you a competitive advantage over non-bank lenders. So if you could provide any color on that, it would be helpful.
Brian Harris: Sure. Thanks, Jade. Yes, I would say, we're looking at some slightly larger transactions and it's just a lot more stability around it financing it this way. You don't have to go about trying to figure out if an individual lender will see the assets the same way you do. But I wouldn't call it anything wholesale indifference. Slightly larger, yes, everything is a little bit more profitable when your cost of funds go down. But for the most part, the one real change that I see in this part of the cycle versus the last time is the assets on which we're lending are of much, much better quality than the garden apartment buildings and older warehouse properties. So we seem to -- when I take a look at the assets that we're lending on, they're really newly built Class A apartment complexes, resort style almost. And a lot of the industrial portfolios are also quite new as a result of all the onshoring that took place.
Jade Rahmani: And on the origination side, I noticed a difference between fundings and commitments upfront that seemed, at least from the outside, a little larger than historically. Were there any construction loans in there or any large CapEx projects in those deals, if you could provide any color?
Brian Harris: I wouldn't say as a rule, but we generally don't write construction loans. So there are no construction loans in that portfolio that you're looking at. And as far as heavy CapEx work, I think if you're gravitating towards a slightly wider spread than maybe you're expecting, I don't think it's as a result of a higher construction component or a lot of TI hammer swinging. It really is just -- we're just getting a little bit better. I think the portfolio doesn't look like it's changing meaningfully. Right now, it's most of the assets are industrial and multifamily. I'm not sure it will stay that way. And we haven't been avoiding hotels. We put one under app recently, but we just haven't run across too many of them. And as I said, a lot of the -- we try to focus more importantly rather than property types is on acquisitions where the borrower is buying something usually at a reset basis. Some of these resets are quite remarkable. But as opposed to cash out refinances. The only real cash out refinances that we're doing is if a guy is coming off a construction loan on an apartment building, and he's only 50% leased now. So those oftentimes have 30% or 40% equity in them. And sometimes there's a cash out refi because the property is now complete and half leased. So other than that, it's pretty straight down the middle lending on apartments and industrial properties.
Operator: Our next question comes from the line of Steve Delaney with Citizens JMP.
Steven Delaney: Congrats on the strong quarter. Curious, let's start with lending. You seem to like the market. You have plenty of capacity. But let's talk about just the $1.9 billion rather than the $5 billion overall portfolio, focusing on the loan portfolio because you appear to be increasingly active there. Do you see -- looking at that portfolio, if we were to look out over the next year, do you see further growth and meaningful growth in that $1.9 billion loan portfolio? And can you give us some idea of a range with your current capital base, how large the loan portfolio might be able to grow?
Brian Harris: Sure. Thanks, Steve. let's start with capital first because if you remember, in the second half of 2024, we took in over $1 billion in loan payoffs. And while we began originating loans more frequently, we were not originating at that pace. So what was happening is each quarter, the loan book would get a little bit smaller. This is really the first quarter in a while where we've originated more than has paid off, and we expect that to continue. So the fourth quarter is off to a very good start. I would expect or as I said originally, the organic side of growth will come from just building up the bridge book. I think that's the place where we're focused right now. And we're pretty happy with where spreads are. They're a little bit less competitive than they were really, I would say, just a couple of months ago, which tends to happen after you hit the midpoint of the year. But -- so I would expect that $1.9 billion portfolio to go up by $1 billion in all likelihood. Maybe I would -- if I had to take the over-under on that $1 billion, I would take the over. We're quite active right now and business begets business. So I think that when we had a pretty strong origination quarter, that gets noticed by borrowers as well as brokers and the phone rings a little bit more. As Pamela mentioned, we have over $500 million in loans under application right now. You never really know how many of these are going to close depending on what happens with the volatility sometimes coming out of the political picture as well as the geopolitical side of things. But generally, I would expect that we -- I think we had that loan book up to around $3.4 billion a couple of years ago, and I would like to get back there. And I think that will come from a few places. One, we have a larger revolver that's mostly undrawn. We have a lot of securities. Securities are paying off at a much more rapid clip than loans right now. And I think that's a testimony to the payoffs that have been coming in and the capital markets becoming more welcoming to single asset transactions. So as you pay down those AAAs in a CLO, the financing becomes quite unpopular. So they've been calling a lot of those bonds, and we'll expect that to continue. I think that our securities portfolio will, through attrition pay off, but also we will sell them. As we said in the quarter, we sold a little over $250 million. We own over -- I think we own over $2 billion today. I would expect that number to go down, but I would expect the loan inventory book to go up.
Steven Delaney: That's really helpful color, Brian. In terms of [ specialty ] comparison, you mentioned the property REITs and their valuation is something that you would be envious of on a -- whether it's on a PE or a dividend yield. Looking at the ROE at 8.3%, I would say, it kind of strikes me as being solid, but in terms of valuation and where the stock is trading relative to book that some improvement to that, maybe something in the 9% to 10% range might be very beneficial to the stock price, and therefore, your valuation relative to book. Is that improving the ROE in a prudent manner? Is that part of your vision for the next 1 to 2 years? And do you think the strategy you have in place will necessarily take your ROE some higher?
Brian Harris: I would say yes to all of those parts of that question. The game plan is to write more loans and we'll get through the cash component of our liquidity. As you remember, we had a lot of T-bills when T-bills were yielding 5.5%, and that kept us away from very tight mortgage loans because if it wasn't at the margin worth sacrificing the liquidity and safety of the securities, we really didn't do it. But now with the Fed cutting rates and promising to cut further, we have a nice mix of floating rate and fixed rate liabilities. So we would expect our cost of funds to be going down. That revolver, I'll remind you, is now priced at SOFR plus 1.25%. So if I am of the opinion the Fed is going to cut rates 100 basis points, usually probably bridging over Powell's last few stance as well as the next Fed official that comes in. And if that happens, you get SOFR down around 3% we can borrow unsecured at 4.25% at that point. So that should all bode well. We've got floors in our bridge loan portfolio up around 6%, 6.25%. And so the loan -- the rates we're able to write loans at these days have actually gone up not down in the last quarter anyway. So we're going to continue doing that. And after we get through the cash component of our liquidity, we'll then begin to sell down or pay down the securities. And the way it comes out on paper, we're hoping to add $1 billion to $2 billion of assets net on the balance sheet and we're hoping to pick up 3% to 4% of profit margin. So if we can take a security that we're earning 5.5% on and get it and pay that loan -- pay the security off and then redistribute, reinvest that money into a loan portfolio that's earning 8.5%, we think that bodes very well for dividend, ROE as well as earnings. So it's not a hard ping-pong ball to follow. That is going to be what we're going to do. It's what we've been saying we're going to do. The one thing that has really masked all the work that we've done has been the very rapid pace of payoffs. And those are high-yielding instruments and we hate to see them go. But when they've been around a little bit past their expiration date, you do want them to pay off, and we've been pretty successful at that. So credit, very stable. We like what we're seeing. The quality is good. The borrowers are good. They've been patient. They're not in difficult financial binds as a result of owning too many over-levered properties. So it looks strong. And you got the stock market at an all-time highs, you got spreads low, rates low, Fed cutting. These are all good conditions on the weather map for a successful lending business at Ladder.
Operator: [Operator Instructions] Our next question comes from the line of Tom Catherwood with BTIG.
William Catherwood: Brian, I just wanted to go back to something that you said in response to Steve's question, and I want to make sure I heard it right. Did you mention that -- I thought you said rates we can get on loans have gone up, not down. Did I hear that right?
Brian Harris: The ones we're looking at, yes. I think -- well, you're seeing -- I mean, I'm not immune to looking at corporate spreads, credit spreads, mortgage spreads. But there's a couple of things going on more recently in the -- literally the last 60 days, I would say. The Fed is letting the mortgage-backed securities portfolio run off. So the agency securities market is actually not as tight as you would think on spread. And the reason why is the Fed is effectively letting $30 billion roll off. I think it's $30 billion. I'm not a Fed watcher. So if I have that wrong, please don't send me a bunch of e-mail. But the other -- after April, when the tariff talk started and now the back and forths that go on, the commercial sector was -- as it always does, and I've said this to you probably several times. In January, every year, we go to a convention down in Miami called CREFC. Everyone is a bull. Everyone comes out, it's going to be its best year ever, and they put a carry trade on until the middle of June. Around the middle of June, they think maybe we paid too much for these things and they start to sell them and they're less aggressive. At Ladder, we have found a nice little theme I think in loan sizes. We traditionally like loans at $25 million to $30 million on middle market lenders by choice. However, we dabbled occasionally in larger loans. The banks are not really writing loans in the $100 million range. That's a little too small for them to put on their balance sheet and then try to securitize. They'll write $1 billion loan with a consortium of banks, but $100 million loan is under their radar and $100 million is probably a little too big for a lot of the CLO issuers that are out there that we mainly compete with. So we're actually very happy in our $50 million to $100 million range right now and we'll try to stay there. And so don't think that we've changed our stripes if we start picking up loans that are a little larger than average. We're still doing plenty of smaller loans, too. But the $100 million type loan is a better asset. It's newer. It's got better financial characteristics to it. And it is higher rate because the competitive landscape is just not as bad as it was. And keep in mind, I'm talking about the last 60 to 90 days. The first half of the year was very, very tight and we were not originating a lot for that reason. In fact, we were buying a lot of securities. Another good proxy, Tom, if you want to take a look at it, is the CLO market. So there's a lot of CLOs coming to market. And they're in the 145, 155, 160 area for AAAs. That's wider than they were just a few months ago. It's not extraordinarily wider. But you're also seeing the VIX tick up. I think it was around 25 the other day after being at 15 for a month. So when you see the VIX ticking up like that and all the volatility around the rhetoric and the political circles, we're able to find things that are pretty attractive. Again, I also think we have a reputation as being very reliable. So as we get to the year-end here, we tend to do -- we always do better in the second half of the year than the first year -- first half of the year when it comes to production. That has been something that has followed me around through my whole career. And I think it has more to do with seasonality and what happens. As you know, insurance companies, they allocate money into fixed income. Usually, by June or July, they're fully invested. So even that competitive force kind of backs off a little bit, too. So we actually prefer to fatten up going into the end of the year.
William Catherwood: Got it. Really appreciate that answer, Brian. And then if I think about then sources and uses -- and again, I know you laid it out before, how you think about funding things. But if the spreads and securities are somewhat widening and the revolver is priced at S plus 125, wouldn't it make sense to then just put everything on the revolver and then term it out with unsecured once you get to $400 million, $500 million and just keep wash rents repeat that? Or is -- do you think selling down securities along with using the revolver gives some other benefit?
Brian Harris: Well, I think it's almost like we have several companies at Ladder with the products that we dabble in. But on the floating rate side -- I'm sorry, on the securities side, I mean, if you take a look at the rating agency REITs, the agency buyers like AGNC and Annaly and a couple of others, these guys are throwing off dividends of 14%, 15%. And they're levered, I don't know, 7x, 8x in many cases. That's way too hot for us on leverage, but with government-guaranteed paper, with a lot of duration, I think your risk is in the duration side of that. But at where we are, these securities, there -- if we levered them up and easily can, the financing cost is around SOFR plus 50 on a AAA. If we're buying things at 150, you can figure out that there is a pretty good spread in there. So we can lever those up to about 15%, but it's a lot of leverage. And the road we're on is not to just have a low cost of funds so we can lever things up. The game plan is to focus more and more in the years ahead on unsecured debt that we extend. But the game -- the change at Ladder versus before we were IG, we would normally be thinking about issuing another bond here because we're growing rapidly, we're going to need more capital. We've got sources of ability to get capital, but we might think about that. But if you really think the Fed is going to cut rates by 75 or 100 basis points, it would not go out and do a bond deal right now because that revolver is going to get down to a low-4% rate. And that's what we think will happen. It doesn't have to happen. But if it does, that's probably the first thing we'll do is draw that. We don't want to draw all of that because that's not what the agencies and investors want to see on the bond side. So -- but my guess is we'll probably -- I don't think securities were ever meant to be a long-term hold for us. They're kind of a parking spot for us while we're waiting for better opportunities to come by on the loan side. And I think our patience has been rewarded because I think Paul mentioned that our spread on the loans we wrote in the $500 million or so was around $279 million. I think the spread on what's coming in the fourth quarter is going to be wider than that.
Operator: Our next question is a follow-up from Jade Rahmani with KBW.
Jade Rahmani: Just curious if you would contemplate launching a securities fund, if you can deliver 15% type returns with leverage, you could put the leverage in the fund, not on Ladder's balance sheet and create value for investors looking for that type of return profile. And of course, comparing to residential mortgage securities, commercial has a lot more predictable duration. So you don't have the prepayment volatility that the agency REITs deal with.
Brian Harris: Yes. I mean, we've done that before. When we first opened, we ran a few investment portfolios even some individuals that we knew because sometimes securities get cheap, but most people with the first and last name don't know how to go buy them. And so oftentimes, we'll get a call and say, why don't you buy these? So we have an asset that's yielding, as I said, a levered yield of around 15% I think. So that's generally attractive, but it does come with a lot of leverage. We've historically looked -- we've looked at that. We've looked at stapling on a residential mortgage arm of things because we all understand that business also, but haven't done it. And the last thing we've looked at too is possibly spinning off our triple net portfolio because we don't get much for that in valuation. So this is going to be -- 2026 is going to be a year about really fine-tuning the columns and what the right cap rate should be on those things. We have an internal manager that has no value apparently. So there's lots of things we can do now around the edges, but the first step is going to be becoming an investment-grade company. And we still like the -- given where we are in the cycle right now, we like the commercial mortgage business better than the residential side. The residential side could get very interesting though, not from a loan, but from a standpoint of if there's too much supply due to the absence of the Fed. So those are very attractive, but as I said, they do have a lot of duration on them. So -- but we're probably -- we're agnostic as to holding on to things that yield 15% or selling things that make 1 to 2 points and then recycling the money. And I think that, that is an option open to us right now, as you saw in the small sales that we did in the third quarter.
Jade Rahmani: And then the New York office equity investment you made, how are you feeling about that? Is that a long-term hold? It looks like it was pretty prescient in terms of timing. But could you also remind us the size of that?
Brian Harris: Sure. Our investment -- we're a minority participant in the equity on that. But we may very well get involved in the debt side of that situation later on, but we have a loan from an insurance company for now. But that building, 780 Third Avenue, by the way, if anybody cares, is -- we put in a $13 million or $14 million investment. At the time, the building was about 50% occupied. I don't know where we are on free rent, but I do believe we've now -- the building is leased over 90% in just a short -- under 1.5 years. So we do like that one. Again, that's a very high-quality building. Third Avenue is not known for high-quality buildings, but a lot of the lower quality is becoming residential. And a lot of those poorly occupied office buildings that are becoming residential, those tenants are looking for space. The real benefit we picked up was between JPMorgan and Citadel, Park Avenue is being just gobbled up on space and a lot of those tenants are also moving. So we didn't -- we thought we were going to get Third Avenue tenants looking for an address. We wound up getting Park Avenue tenants that were being displaced by JPMorgan's expansion. So all going well. I wish we had done more of that. And do we like that? We are looking at another situation right now of larger size than the one we did at 780 Third Avenue, and we like it. These transportation hubs in New York City tend to do better. They come out a little bit quicker, especially when people have concerns around safety on mass transportation. I think that situation has largely corrected itself with the return of people. Our offices are full. We haven't ordered anybody to be in 5 days a week, but most of them are. So we generally like pockets of the office market, but we do understand the obsolescence associated with some of the older ones. So yes, we like where we are. We're happy to do more of those investments. And that long-term hold is the last part of your question there. I would say, we're going to hold that for a while, yes.
Operator: We have no further questions at this time. Mr. Harris, I'd like to turn the floor back over to you for closing comments.
Brian Harris: Thanks, everybody, for listening and those who dialed in afterwards. And good year 2025, we're in the fourth quarter. The reason I say that now is because we're not going to talk again until after the new year comes and we get through the audited financials. But a lot of this is just falling into place the way we largely expected it. The only real surprises were the rapid paydowns that took place in the second half of last year, but we're catching up quickly. We've had an inflection point here in the last quarter where we originated more than paid off, and we think that, that is going to be a consistent theme over the next 4 or 5 quarters. So thank you for tuning in, and we'll catch up with you after the new year.
Operator: Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.