Exchange: LSE | Sector: Real Estate | Industry: REIT Industrial
Q3 2025
Published: Oct 27, 2025
Earnings Highlights
Revenue of $101.94M up 50.2% year-over-year
EPS of $0.15 decreased by 31.8% from previous year
Gross margin of 79.9%
Net income of 19.19M
"N/A" - N/A
Ladder Capital Corp (0JSZ.L) QQ3 2025 Results — Resilient Revenue Growth Amid Elevated Leverage in Industrial CRE Lending
Executive Summary
Ladder Capital Corp reported Q3 2025 metrics that reflect a combination of strong top-line momentum and a leveraged balance sheet. Revenue stood at $101.94 million with gross profit of $81.43 million, delivering a gross margin of approximately 79.9% and an EBITDA of $72.87 million. Operating income reached $26.67 million and net income was $19.19 million, translating to an EPS of $0.15. Year-over-year, revenue expanded 50.17% and gross profit rose 58.12%, indicating meaningful volume growth and favorable mix within the Loans and Securities segments. However, net income declined by roughly 31.25% versus the prior year period, while QoQ net income rose about 10.74%, suggesting some quarterly volatility likely tied to interest and financing costs in a highly levered CRE lending model.
The company continues to operate with a high degree of leverage: debt ratio of 0.64 and long-term debt to capitalization of 66.7%, alongside an interest coverage ratio near 0.61x. While cash flow generation remains positive, with operating cash flow per share of $0.21 and free cash flow per share of $0.22, the dividend policy remains sizable relative to GAAP earnings (dividend payout metrics imply a cash-flow-driven distribution framework typical for REITs). The stock trades around a price-to-book near 0.91x, with a dividend yield of approximately 4.4%. These factors together imply a valuation that may reflect both the upside potential from CRE lending scale and the risk premium associated with leverage and cyclicality in industrial real estate. Management commentary in the call would be expected to address loan origination volumes, credit performance in the industrial CRE book, and the balance sheet optimization program; however, transcript data is not provided in the material.
Cash Flow and Payout
- Operating Cash Flow per Share: $0.210; Free Cash Flow per Share: $0.222
- Dividend Yield: 4.37%; Dividend Payout Ratio (as a proxy): 3.11x (implies cash-flow-based distribution common for REITs)
- Cash Conversion Metrics: CFO/Sales ~25.8%; FCF/Operating Cash Flow ~1.06x (reflecting strong cash generation relative to operating cash flow)
Overall Assessment
- The QQ3 2025 quarter demonstrates solid revenue growth and margin retention, with a meaningful rebound in gross profit and EBITDA versus the prior year. However, the elevated leverage and modest interest coverage introduce key risk considerations, particularly in a rising-rate environment and potential CRE-cycle headwinds. Investors should weigh the durable cash flow characteristics typical of a CRE lending REIT against the balance sheet discipline required to sustain dividends and fund growth.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
101.94M
50.17%
4.29%
Gross Profit
81.43M
58.12%
3.59%
Operating Income
26.67M
5.42%
-57.21%
Net Income
19.19M
-31.25%
10.74%
EPS
0.15
-31.82%
7.14%
Key Financial Ratios
currentRatio
0.74
grossProfitMargin
79.9%
operatingProfitMargin
26.2%
netProfitMargin
18.8%
returnOnAssets
0.41%
returnOnEquity
1.28%
debtEquityRatio
2
operatingCashFlowPerShare
$0.21
freeCashFlowPerShare
$0.22
dividendPayoutRatio
311%
priceToBookRatio
0.91
priceEarningsRatio
17.82
Net Income vs. Revenue
Expense Breakdown
Management Commentary
No earnings call transcript data provided in the supplied material; consequently, there are no management quotes or theme-based highlights to extract.
N/A
— N/A
N/A
— N/A
Forward Guidance
In the absence of formal forward guidance within the provided data, the outlook for Ladder Capital should be anchored to macro CRE conditions, interest rate trajectory, and the company’s ability to manage its leverage. Key factors to monitor include: 1) loan origination volumes and credit quality in the industrial and transition-related CRE segments, 2) ability to optimize the funding mix and reduce the cost of capital, 3) securitization activity or other structured finance transactions that could improve liquidity and diversify funding, 4) resilience of cash flow under higher funding costs and potential spreads widening, and 5) management’s capital allocation priorities (dividends vs. debt repayment vs. growth). Given the current leverage metrics (debt ratio 0.64; interest coverage 0.61x) and the positive but modest free cash flow generation, the achievability of any aggressive growth targets would hinge on stabilizing funding costs and improving coverage metrics. Investors should monitor quarterly loan book quality, delinquencies, and the mix between cash-flowing loans and mark-to-market securities.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
0JSZ.L Focus
79.87%
26.20%
1.28%
17.82%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Overall, Ladder Capital presents a secularly attractive model in industrial CRE lending with visible revenue growth and substantial gross margins. The near-term cash flow remains positive, supporting a dividend and potential capital deployment options. However, the elevated leverage and limited interest coverage underscore the need for careful risk management and balance-sheet optimization. The stock could appeal to investors seeking income with exposure to CRE lending, but a cautious stance is warranted until the company demonstrates sustained improvement in coverage metrics and a more resilient funding framework. If management executes on deleveraging or diversifies funding to lower-cost instruments, the valuation (P/B near 0.91x) could reflect meaningful upside—especially given the strong gross margins and FCF generation. In the near term, key catalysts include stronger loan origination growth, better credit metrics, and evidence of a more robust capital structure that reduces refinancing risk.
Key Investment Factors
Growth Potential
Expansion of the core industrial CRE lending and balance-sheet first mortgage loan portfolio, bolstered by securitization and note purchase activity; potential margin expansion through disciplined rate management and improved funding terms; scalable cash flow driven by REIT cash tax efficiency and dividend policy aligned with FFO-like cash generation.
Profitability Risk
High leverage with debt-to-capitalization ~66.7%; low interest coverage at ~0.61x raises sensitivity to rising rates and refinancing risk; CRE cycle exposure, occupancy and cash-flow volatility in real estate markets; potential liquidity risk if debt markets tighten; dividend sustainability depends on ongoing cash flow generation and capital allocation decisions.
Financial Position
Positive operating cash flow per share ($0.21) and free cash flow per share ($0.22) support a cash flow-backed dividend, but leverage remains a principal risk. Cash per share of $0.394 and a P/B of ~0.91x imply a balance between value and risk. A prudent balance-sheet strategy would focus on de-risking the balance sheet, extending maturities, and ensuring liquidity alongside dividend stability.
SWOT Analysis
Strengths
High gross margin around 80%, indicating strong pricing power and favorable loan mix.
Positive quarterly net income with ongoing EBITDA generation (EBITDA $72.87m) and solid operating margin (~26.16%).
Diversified business mix across Loans, Securities, and Real Estate segments provides multiple cash-flow streams.
REIT structure supports cash-flow-focused return of value to shareholders through dividends.
Weaknesses
Elevated leverage with debt ratio ~0.64 and interest coverage ~0.61x, creating sensitivity to interest rate movements.
Relatively low asset turnover and heavy reliance on debt financing may constrain growth and capital allocation flexibility.
Payout ratios imply dividends are heavily funded by cash flow rather than GAAP earnings, which could be vulnerable if cash flow comes under pressure.
Opportunities
Grow the loan book in the robust industrial CRE segment and enhance securitization activity to diversify funding and reduce financing costs.
Optimization of the capital structure could improve coverage metrics and reduce cost of debt.
Potential market tailwinds from CRE demand in logistics, manufacturing, and transitional properties (lease-up, repositioning).
Threats
Interest rate volatility and economic downturns impacting CRE cash flows and loan performance.
Credit risk in first mortgage loans during downturns, refinancings, or tenant vacancies.
Competition for capex and financing in a tight CRE lending environment; regulatory and tax changes could affect REIT economics.