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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Good afternoon and welcome to Ladder Capital Corp.'s Earnings Call for the Third Quarter of 2021. As a reminder, today's call is being recorded. This afternoon, Ladder released its financial results for the quarter ended September 30th, 2021.
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 supplemental presentation, which is available in the Investor Relations section of our website.
At this time, I'd like to turn the call over to Ladder's President, Pamela McCormack. Please go ahead.
Thank you and good evening, everyone. For the third quarter, Ladder generated distributable earnings of $17 million or $0.14 per share. I'm pleased to report that we had another quarter of strong loan originations supplemented by additional gains from our conduit securitization and real estate equity businesses. After resuming making loans in March, we expect to end this year by having originated the highest annual volume of balance sheet loans in Ladder's history.
Year-to-date through September 30th, we originated $1.5 billion of balance sheet loans, driving both portfolio and earnings growth. Approximately one-third of our loan originations were made to repeat Ladder borrowers, reflecting the value of our franchise and strength of our relationships.
In the third quarter, we originated 23 balance sheet loans totaling $578 million, 75% of those loans are collateralized by multifamily, manufactured housing, industrial and suburban office properties. In addition, we have a strong and growing pipeline with over $1.2 billion of additional loans under applications.
The composition of our balance sheet loan portfolio remains consistent with prior quarters, and we ended September with a $2.8 billion portfolio primarily comprised of lightly transitional balance sheet loans with a weighted average loan to value of 67%. Furthermore, we continue to expect our loan production to comfortably outpace repayments over the coming quarters.
After experiencing robust payoff last year, 45% of our balance sheet loan portfolio was now comprised of post-COVID originations. Our remaining loan portfolio is performing very well with 100% collections, demonstrating the strength of our conservative underwriting and the success of our proactive asset management process.
We continue to focus on the middle market where we're seeing constructive credit trends and opportunities to lend in high growth markets that are experiencing positive demographic shifts and strong fundamentals. Our strategy allows us to achieve compelling risk adjusted returns while building a diverse loan portfolio comprised of granular loans with an average loan size of approximately $20 million.
In our conduit business during the third quarter, we originated $50 million of new loans and securitized $73 million of loans for a gain of $2.4 million. We are also continuing to build our pipeline of conduit loans which we will target the sale of securitization over the coming quarters. In our real estate equity segment, we sold three assets generating $8.4 million of gains above undepreciated book value, further illustrating the embedded value in our real estate portfolio.
Turning to our capitalization. As of September 30th and after buying back $7.6 million of stock, we had total liquidity of over $1 billion and our adjusted leverage stood at 1.6 times net of cash and 1.1 times net of cash and securities, which we intend to continue to amortize down and or sell.
During the quarter, we closed a $600 million amount of CLO at a cost of LIBOR plus 155 basis points. While we plan to continue to take advantage of the CLO market as an additional source of attractive financing available to Ladder, we remain committed to the unsecured corporate bond market. Which commitment is accompanied by our high quality pool of unencumbered assets, primarily comprised of cash and first mortgage loans.
Looking forward, we expect continued portfolio and earnings growth. In addition, we are well positioned to benefit from a potential rising rate environment, both by way of our large and growing portfolio of floating rate loans, as well as a significant base of fixed rate liabilities. In short, we expect our strong origination's momentum and the long-term investment in our capital structure to bode well for Ladder in the coming quarters and years.
With that, I'll turn the call over to Paul.
Thank you, Pamela. As discussed in the third quarter, Ladder generated distributable earnings of $17 million or $0.14 per share. As Pamela mentioned, our originations and pipeline are very strong and complemented by the $600 million managed CLO that we closed in the third quarter.
The CLO financing has an 82% advance rate, a weighted average all-in cost of LIBOR plus 189 basis points and provides for a two-year reinvestment period, with an expected weighted average duration of approximately four years. The offering was heavily oversubscribed, attracted a broad range of leading institutional investors and provides Ladder a highly attractive cost of capital and a flexible non-recourse and non-mark-to-market format.
Turning to our corporate bond financing. In September, we redeemed $466 million of 5.25% bonds at par that were due to mature in 2022. The bonds were effectively refinanced with our June offering of $650 million that had an eight-year tenor of 4.75% coupon with the ability to call the bonds after three years. Our nearest bond maturity is now October of 2025.
Unsecured bonds and non-recourse funding sources continue to be a cornerstone of our capital structure. Our recent successful offerings in both markets have further solidified and lengthened our liability structure or reducing our usage of mark-to-market financing. We are one notch away from an investment grade rating with two of the three major rating agencies. We remain committed to the unsecured bond market and conservative liability management as we continue our march towards becoming an investment grade rated company.
As of September 30th, approximately 87% of our capital structure is comprised of equity, unsecured bonds and non-recourse, non-mark-to-market debt. Furthermore, a more expensive crisis area of financing continues to amortize aggressively. Timing of this works well with our deployment of capital into new loan origination and our goal for a fully deployed balance sheet in the coming quarters.
Complementing the strength of our capital structure are our three segments which continue to perform well. Our $2.8 billion balance sheet loan portfolio was 97% first mortgage loans, diverse in terms of collateral and geography, with less than a two-year weighted average remaining duration.
During the third quarter, loan origination activity outpaced payoffs as we added a net $218 million in balance sheet loans. Our balance sheet loan portfolio continues to perform well as we received the 100% interest collections during the third quarter, and the general portion of our CECL reserve decreased to 50 basis points.
The decrease was driven by a significant portion of our balance sheet loan portfolio are now being comprised of 2021 originations with new valuations and the overall improvement in the macroeconomic outlook. Furthermore, we reduced our non-accrual loan balance by $12 million as one, the hotel loan paid off at par during the quarter. The payoff included the collection of all default interest and late fees due. Moreover, no new loans were added to non-accrual status.
As Pamela mentioned, our conduit business generated $2.4 million of distributable gains, with the contribution of $73 million of first mortgage loans to a securitization during the quarter. Our $1.2 billion real estate portfolio is diverse and granular and includes 163 net leased properties, which represents two-thirds of the segment that continued to perform well during the quarter with the 100% rent collections.
The sale of two of our net leased properties contributed $6 million to distributable earnings, generating a combined return on equity of 16.7% over our whole period. The sales further demonstrate the embedded value in our real estate portfolio. Also during the third quarter, we successfully sold an REO of student housing property, generating a $2.3 million gain above our original basis. And we acquired a student housing property with a joint venture partner for $20 million.
Turning to our securities portfolio. As of September 30th, our $725 million securities portfolio is 85% AAA rated, almost entirely investment grade rated with a weighted average duration of approximately two years. This portfolio continues to benefit from strong natural amortization and liquidity, as the majority of the positions are front pay bonds.
Also as of September 30th, our unencumbered asset pool stands at $2.8 billion and it's comprised of 78% cash and first mortgage loans. The size and quality of our unencumbered asset pool continues to provide Ladder excellent financial flexibility.
During the third quarter, we repurchased 694,000 shares of stock at an average price of $10.94. And our Board of Directors increased the authorization level of our share buyback program to $50 million, effectively adding $15 million in buyback ability to the previous outstanding authorization. Undepreciated book value per share was $13.78 at quarter end, while GAAP book value per share was $11.98 based on 125.5 million shares outstanding as of September 30th.
We declared a $0.20 per share dividend in the third quarter which was paid in October 15th. We expect our dividends remain unchanged in the fourth quarter of 2021. For more details on our third quarter 2021 operating results, please refer to our quarterly earnings supplements which is available on our website, as well as our 10-Q which we expect to file tomorrow.
I'll now turn the call over to Brian.
Thanks, Paul. As I was preparing remarks for this call, I realized just how similar my thoughts were to what I spoke about in our last earnings call. It's apparent that we are in the final stage of our pandemic response business plan that we set forth about 18 months ago. With our earliest corporate bond maturity, and now not until 2025, we'd built a strong foundation to finance our planned increase in earning assets in the years ahead.
As we enter the end of 2021, we have planned have liquidity and are lightly leveraged. This combination will provide us with plenty of runway to increase our loan portfolio in the years ahead and continue the earnings momentum now underway at Ladder. I think the second and third quarters will look similar to the next four quarters as we follow our simple business plan of investing our cash into newly originated balance sheet loans at a pace that exceeds the pace of loan payoffs each quarter. This growth in lending will be accompanied by growth in earnings and we expect the positive earnings momentum that began in the second quarter to continue.
As we invest our cash on hand, our earnings momentum should persist as we continue to sell our securities and select real estate assets to supplement quarterly earnings and provide additional capital for reinvestment into higher yielding commercial mortgage loans. We currently have $2.8 billion of unencumbered assets and 130 million of those assets are securities. Over the next year, I would anticipate net loan growth and increased earnings as we become fully invested using modest leverage. As evidenced by our large and growing pipeline of loans under application we are seeing plenty of opportunities to lend safely in a post-pandemic world.
We've constructed our balance sheet to benefit from rising interest rates that we expect to prevail in the near-term, with a substantial amount of fixed rate, unsecured, longer-term debt as a differentiating feature at Ladder. By extension, we think inflation is here and won't be as transitory as many think. There are so many clear signs of this that they're almost too numerous to count. While commodity prices can move up and down rapidly, shelter costs as in apartment rental rates and home prices don't react nearly as fast in the normal economy.
The recent cost of living adjustment announced for the social security recipients of the United States at 5.9% was the largest in 40 years. So that part of the government is seeing things differently than the Fed. I'll end here by saying that higher rates, a growing floating rate loan portfolio and strong markets for selling mortgage-backed securities and real estate should pave the way for continued earnings growth at Ladder.
I'll now go to Q&A.
At this time, we'll be conducting a question-and-answer session. [Operator Instructions] Our first question comes from line of Tim Hayes with BTIG. You may proceed with your question.
Hey, good evening, guys. First question here just actually maybe one or two around the pipeline. $1.2 billion clearly you're looking at a lot of different loans right now. Would you be able to first comment on how much of that you expect to close in the first quarter or how much has been closed versus you know still in the process of closing? And then maybe just a little bit of color on the asset breakout.
You know, this past quarter it looked like, here you mentioned suburban office as some of the loans you were doing. And I think the allocation, the portfolio went up a bit. So I'm just curious if you guys are taking you know - if you're finding opportunities to get a little bit more spread there, given that some lenders are still cautious in office or any other details on that would be helpful. Thanks.
Tim, this is Brian. Can you clarify for me? I think you asked about the first quarter, but did you mean the first month of the fourth quarter or did you mean the -
I - sorry, I must have said first, I meant fourth quarter.
Okay, in total -
So just to repeat the question with less mumbling or [indiscernible] jumbling. How much of the pipeline do you expect to close in the fourth quarter?
All right, Pamela, I'm going to punt that one over to you, if you don't mind.
Yeah, no problem. So we have you know probably at this point over 1 billion too. I think our goal was to close you know somewhere between $800 million and $1 billion by quarter end. And it looks a lot like the same composition I think your other question was, what does it look like? It's the same composition. We're primarily multifamily office and mixed use and it looks a lot like everything we've done year-to-date.
Okay, fair enough. But I guess just maybe harping on that part B of that question. Just the suburban office you know are you doing anything in urban markets on the office side? Are you finding certain types of you know office assets that aren't receiving as much attention from the capital side and are providing opportunities to lend a little bit wider spread same on maybe on the hotel side? Or is - you know, are most of that where you're lending kind of in the more defensive range where competition's a little stiffer?
Okay. Sure, I'll take that one. As you know, we don't target CLO specifically. So we'll oftentimes you know drift into areas perhaps that don't fit right into a typical CLO at the current moment. But we do focus on credit and basis, we always focus on dollars per foot, dollars per room for hotels, dollars per unit for apartment buildings. So we're definitely seeing some openings that are better than they've historically been.
I have to be a little bit cautious with the answer, because there's a few cities that you know still pretty cautious around. In particular, I would say, from my own personal view, San Francisco and Chicago on the office side concern me and we're not overly aggressive in chasing even there.
New York City is interesting. It has opened up much nicer than I thought it would. The residential areas of New York are quite crowded, the business side of New York isn't quite back. But given the way rents are moving in New York City, while we think it's a matter of time here till we wind up back in a hybrid scenario.
And while New York does have some of the same problems as Chicago and San Francisco, New York has the one benefit of getting a new Mayor in November. And we're - and it is a very hopeful feeling throughout the city that perhaps the new Mayor will focus a little bit more on crime than the last one.
So, but we're also seeing in some of the lower-tax states, California - I'm sorry, Florida, Texas, we are seeing plenty of activity there. When you look at an office building in Florida, it looks like it's on sale compared to New York and - or California. And it just looks like it should be relatively easy to grow into these things.
And the other thing that we're seeing that we're very happy about is that most of the loans that we're doing our acquisitions, they're not refinances of a slowed down business plan, because of COVID, what we're seeing is somebody actually putting new capital up, acquiring an asset with a business plan and getting a new loan from us. And that's generally a safer place to be a lender in.
And so the office market is definitely yielding more than the multifamily market. The multifamily market is a little overheated in my opinion, but it does have some technicals that are going in the right direction, fundamentals are supportive. But that goes along with an inflation conversation that I mentioned there.
So yes, we did do two hotel loans in the quarter. Strangely, one of them was even in Chicago. But you know, these are special situations, you really have to underwrite the value of the property as opposed to where you think you know the cash flows might be. So but if you look at 20 hotels and you do two, that's fine. We're not actively seeking to do you know high yielding hotels, we - it is expensive capital for us. And we don't want to own a lot of it, but we're happy to own some of it.
And so as Pamela mentioned, we're really - it looks to me like the portfolio is shaking out in the neighborhood of 35% office, then the rest, almost all of it is multifamily and mixed use. And when I say mixed use, it's mostly multifamily. There might very well be a retail component or office component but the lion's share of the cash flows in a mixed use property at Ladder are coming from the apartments.
That's some good color. Thanks for clarifying there and tackling my - all my questions that I packaged into one. I'll drop off there and hop back in the queue. Thanks, guys.
Sure.
Our next question comes from the line of Stephen Laws with Raymond James. You may proceed with your question.
Hi, good afternoon. Brian, I guess first question you know, the second quarter in a row you guys have harvested you know a decent amount of gains from real estate sales. Can you talk about how you view the remaining assets there and whether we're going to continue to see gains? You know, how we should think about that in the quarters ahead?
Sure. We are, I would say an interested seller in our real estate portfolio, because we happen to think it has appreciated greatly. That could be, because it performed so well in a pandemic, it could be, because we have more than 10 years left on the leases. And it could be, because several of the companies that we backed as a private entity are now public with audited financials. But the necessity based nature of what you know we've invested in over the prior 10 years is really paying off right now.
And so we own them at very attractive levels. So a lot of our cash flows are higher now, because we've taken some increases in rent. And the - if you look at the, you know the guys who buy net lease REITs for a living, they are much lower yielding. So there - there's - they have appreciated rather dramatically.
And so from our perspective, we will harvest gains when it seems like it's a fair price, we always go into every transaction with a view towards where would we sell this and when. And when we start to exceed those prices, unless there's a reason for it that we think is going to change you know we will become a seller.
The other thing that we did too, and unfortunately, we had a period in time there where our stock was trading well below book value. And so anytime you see that, you say to yourself, all right, where's the problem here. So as you know, we piled up a cash hoard of about $2 billion to convince the market that that probably wasn't a problem. We had our securities portfolio that people worried about a little bit, they don't worry about it anymore and that seems fine.
We had a real estate portfolio that doesn't get a lot of mention, but these are really the silent heroes of the portfolio. These things generate double-digit returns day in and day out, we had no problems with them during COVID. And if we want to take some gains, we can. We have the same labels in multiple properties. So, for instance, we have a grocery store that's private and we own seven or eight of those, and we sold one of them.
We own some wholesale clubs and where we owned eight or nine of those, and we sold three of them. And the point there really is, well, if we sold three of them at a 30% gain, probably the other five are up 30% also. And that is largely what we're finding out. So we did some checking here and there. We wanted to make sure we had it right that you know we thought the cap rates were compressing, and in fact, they are.
So I would expect to continue to see some sales from us, but I don't think you should expect to see wholesale selling. I think that - we're taking modest gains we're not - there's no real rush. Sometimes we get a price from somebody we want to sell to and then they decide not to buy it and you don't hear about it. But we're relatively convinced we've got embedded gains that are quite sizable in that portfolio.
Great, appreciate the color there. And as a follow-up maybe to Tim's question on the portfolio, kind of comparing the last two supplements, looks like the allocation of loans greater than $100 million doubled from like 6% to 13%. And your exposure to South United States increased 600 basis points. So you know how targeted was that versus coincidental? It seems like an appetite is there for larger loans, given you know how much liquidity you guys have on the sidelines? So maybe can you touch on those two shifts or you know trends on the characteristics of the portfolio?
Sure. Well we're very positive on certain parts of the country, mostly driven by state as opposed to you know the southeast in general. And property types you know we feel pretty good about and when you're lending below replacement costs, especially with an office building, that's really generally a safe place to go unless you're going to have a tectonic shift in how office properties are used.
But frankly, in some of these office buildings in Downtown Miami, I think if housing crisis continued, some of these things will even convert to apartments at some point. But you know these things are in the couple of hundred dollar a foot range, when you're seeing apartments that 1,000 and 2,000 a foot trading.
So there's plenty of crossover possibilities there. But I wouldn't say - I would actually call it more coincidental than anything else. And I think a lot of that has to do with the fact that some of the larger competitors of ours that do traffic in $100 million plus office mortgages are you know setting back a little bit because they've got a rather large portfolio from the pre-COVID days and obviously you know some tenancy you know is a little shaky, what we're doing is, we're getting into the - we see a seam here and we're able to, we know how to, and we were in larger banks for many years in their real estate portfolio.
So we're getting a chance to take a look at loans that we don't usually compete for. And it's not because we can't compete for them, we're able - we've always held that the middle market has a safer and higher yielding you know analysis for us. So we'd rather do 10 trades at $15 million then a $150 million loan. I know that that sounds crazy, but it sounds like you need a lot of people, but it does actually keep you pretty safe.
However, once in a while you know through repeat customers or for various other reasons you know when perhaps our competitors a little more busy on any given day, we do see some openings and we'll step in there. I think when we first opened Ladder, the Michigan area was having a hell of a time, because the auto companies were in trouble. And we were one of the largest lenders in Michigan and it wasn't because we were targeting Michigan, it's just there were no banks in Michigan at that time that were actively lending. I would argue a lot of the same thing happened in Florida.
And so you know we just happen to have $200 million loans in Florida and we're actually pretty comfortable in New York too, but you won't usually see us on the trophy buildings. You'll see us in the, you know, the government center, the financial district, the B buildings that aren't so pretty, but very affordable rents, especially when compared to some of the A properties.
I would just add -
Great -
Notwithstanding a couple of large loans, our average loan size is still well below $25 million on the portfolio.
Yeah, I did notice that really changed much sequentially, even though the $100 million plus doubled as a mix, but appreciate to point that out, Pamela, and thank you for the comments this evening.
And also, Steve, I'd just point out too that, when the question comes around like how much you think you're going to close in the quarter that Pamela just answered. Obviously, at Ladder, it's a little bit different than in some other places, which if we close $200 million loan, we're going to be on the high side of things. And if that loan doesn't close, we'll be on the normal side of things, which you know to me, you know I think the first quarter we, I don't remember the numbers, $800 million in the second quarter and I think this quarter, we closed $530 million or something like that.
So I thought this quarter was a little slow, actually. And I know that one of the reasons it was a little slow was, believe it or not, we're getting caught in the supply chain also. FedEx and overnight carriers don't oftentimes deliver overnight. And sometimes real estate closings have to wait a few days because of that. So there's - it's tough to close quickly right now. So we're trying to become more efficient of the closing process, but some of it is beyond our control.
Sure. Appreciate the comments, Brian. Thank you.
Yep.
Our next question comes from the line of Steve DeLaney with JMP Securities. You may proceed with your question.
Thanks. And I hope everybody at Ladder is well. And congrats on the broad progress here for the second straight quarter. I'd like to start with the loans sale gains that Pamela mentioned. And Pamela you mentioned a figure of $2.4 million which just looks like it works out to kind of a three plus percent gain on sale on the $73 million. But, Paul, the income statement, the GAAP income statement says - shows $3.3 million of a gain on sale that were there's some loans in there that weren't conduit loans that were sold in the quarter?
No, the impact is the hedging, Steve. So -
I see -
The GAAP will show the gross amount and the hedge is associated with those sales -
Got it. That - they're in another line in there. I mean so - that's gross and then not including the hedges. So Pamela's figure was, okay, great. 3.3%. Okay, that's helpful. And then maybe while we're on that same kind of comparison, so on the triple net lease sales of $8 million to distributable and then the GAAP gains are $17.8 million. Is the delta there something to do with recapture of depreciation?
Exactly, exactly. That's all those -
I chose a good guess.
Yeah.
This is the amount of CPA.
Yeah, okay. Well the $17 million was nice, but that will take the $8 million for sure. No problem. Okay, that's very helpful. Thanks for that. And then the last thing just to wrap up, that cash and really nice to see it come down you know $300 million quarter-over-quarter. Guess I'm thinking out you know, Brian, after you know you're using CLOs now and you're getting great advance rates. In fact, I see you might be doing another CLO FL3 in November, even bigger.
But where - with everything that's going on, where do you see kind of cash settling you know in a range? Chris Mueller mentioned to me, said look like pre-COVID, you guys usually carry at least at quarter end you showed about $100 million in cash. But now you know obviously, we're still - we're well over a $0.5 million. Just curious where you know as we model out you know 6, 9, 12 months from now where cash might settle.
I think it'll probably still be in that $100 million area.
Okay.
Admittedly that was a pretty unique situation that took place when the US government turned off the US economy. And I can't say it won't happen again. But you know let's hope not. But I think you really also have to - I know I've learned a lesson, you have to really keep an eye on what can hurt you. You know what, on a mark-to-market basis what can really move in price.
And so to the extent that you've got credit-based margin calls in your repo facility, and you've got mark-to-market securities, you have to travel a little more cash if you have securities. I would imagine as you correctly noted that we're all we're really doing here which is why I started by saying it sounds awfully similar to the last quarter and I get the feeling we're going to be a broken record here for the next two quarters -
That's fine.
Because all we're doing is moving cash into commercial mortgages. And we have lots of it still, we are - the payoffs have slowed, because I think we had faster payoffs than everybody else, because we had shorter maturity dates, because as I said, we don't really targets CLOs. And we keep the activity to what's required. So if a guy has a 90,000 square foot shopping center with 10,000 square foot vacant, he doesn't get five years, you know we'll give them 12 months for that.
So I think you're going to just see us, you know, I was kidding around with Pamela when we were writing our scripts, and I was saying, it's lather, rinse, repeat, we're just going to do the same thing. We're just moving cash, which earns nothing into commercial mortgage loans, which earn around 5% unlevered. And we have 1.1 times leverage if you get rid of securities and cash. And the reason we say that is because we're going to get rid of the securities. And we have $130 million of bonds that are saleable that are not levered at all.
And so that's $130 million in cash we can go to if we need it, we have a $250 million revolver we haven't drawn. So it looks like this is just going to be a mortgage lending machine for the next 12 months, I think. And the question really is, and I think what the Governor will be, when we get to a certain size in our portfolio is, how much are we going to push leverage knowing that we're trying to become an investment grade company. So that is where I think the pressure points will come in. But I don't see that for nine months.
Well -
And, Brian, I just wanted to add you know, you're dating us with the lather, rinse and repeat shampoo commercial. But I wanted to add what I think I don't know if you caught this, but when you talked about the cash position that's in combination with the $266 million undrawn revolver, so I just -
All right, good point.
Security versus the cash.
Yeah, yeah, that makes a good sense. Okay. So listen, thanks for the comments. You know great progress. I think it's exactly what the Street wants to see and you're going to see that with another solid quarter, the basic blocking and tackling in commercial real estate bridge lending is going to really help the stock price here within the next couple of months. So congrats for that and thanks.
Okay, thank you.
Thank you.
Our next question comes from the line of Matthew Howlett with B. Riley. You may proceed with your question.
Hey, Brian just a follow-up on the investment grade. How long typically would it take to get to investment grade? And how long would it take you to redo the stack? The unsecured debt called your legacy stuff that's once you get it?
Well, if I answer that question, there are two or three agencies that will put me in a jail cell for a year you know and make me wait. So I have my own model in my head. It's not around the corner, but we're hoping to do it in your lifetime.
Very helpful. And then just you're on track to fully extinguished debt, that the legacy CLO from Goldman and that the Koch facility that's still on track to pay down, because that's something I've seen a lot.
Yeah, I'll let Paul answer. But I know that the Goldman facility, I think I checked that yesterday I think that's down $20 million, $23 million. And Paul, you can tell him about that Koch facility when that runs out.
Yeah, all-in combined those two facilities have amortized down 60%, over 60% now. The Goldman facility very well could be behind this in the fourth quarter and Koch likely through the first quarter and it'll be behind us.
Most of the costs associated with both of them are gone. They're already absorbed.
Got you, great. Well thank you.
Thank you.
[Operator Instructions] Ladies and gentlemen, we have reached the end of today's question-and-answer session. I would like to turn this call back over to Mr. Brian Harris for closing remarks.
Okay. Thanks, everybody for joining us this evening and those of you who'll listen later and we appreciate it. Ladder is on its way and we're going to continue to keep doing what the progress you've seen over the last two quarters. I suspect it'll just continue in that direction. And I would just point out that we're going to make every effort to deliver our yearend earnings report earlier this year, hopefully in I would say around the early to mid-part of February. Okay, so I look forward to talking to you then. Other than that, I got to get back to work. Thanks all.
This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation. Enjoy the rest of your day.