And as I said, we’re almost — 2021 was when we started seeing extraordinarily leveraged properties be purchased at 3, 3.5 caps. That was right around the time where Ladder Capital switched to doing fixed rate 2 year loans with fees in and fees out. And we attracted brand new properties coming off construction loans. And so as a result of that, that’s the CECL [ph] we’re dealing with right now. We’re dealing with fixed rate loans that are maturing, that are doing just fine, and they’re brand new. And so the borrower has to figure out how to refinance it, pay it down or expend it. And we’re happy to work with them on that if they’re performing fine. But I think still the ROE calculation is just not what they had hoped it would be. Agency refi’s are in the mid-5s.
There’s prep [ph] available and the sponsor can also sell the asset at the debt yields we talked about, and we’re seeing that as well.
Pamela McCormack: The only thing I wanted to add is of our payoffs in this year 40% were in multifamily. So agree with your comment, but caveat that you’re seeing sponsors defending, especially when it’s not a widely syndicated asset, and they’re invested in the asset. We are seeing them pay off and we are seeing them defend. And as Brian said, we’re comfortable at our bases in any event, and I think some of this could actually lead to opportunity.
Jade Rahmani: It probably will. Thanks very much.
Operator: [Operator Instructions] Next question comes from Matthew Howlett with B. Riley Securities. Please go ahead.
Matthew Howlett: Yeah. Hey, thanks for taking my question. Just to follow up on the theme around credit. And I look at the headlines every day on commercial real estate, bearish term like they’re saying, a trillion in losses for the office sector and I look at the fear and the stock prices, even the lenders. But your portfolio’s holding up well. It’s managing higher interest rates. You have taken very few properties back. What’s the disconnect? I mean, Brian, you talked about the sponsors are going to still holding on for a while now. Do we really need to see rates just come down, cap rates come down for this to all work out or not see this crisis in defaults that some of the headlines are suggesting?
Brian Harris: I actually don’t think that’s it. I think what you’re seeing, the headlines in particular tend to be focused around large cities and media centers. And there was a lot of lending that took place in Washington, DC and some of the larger gateway cities and those cities are struggling with something other than high interest rates. There is a work from home component of that, there’s a criminal element taking place. There’s people, a wealth exodus taking place in some of these states. It’s a tax situation where people are moving out of certain Northeast cities down to Sunbelt. So those are fixable. It’s not like they can’t be straightened out, but the market is resetting. And that’s going to be painful. So the disconnect, I think, at Ladder is that we have smaller loans.
We do have some large loans. We have a couple of loans over $100 million, and two or three of them, actually. Two of them are in Miami, or Aventura. We feel good there, it’s probably the best office market in the United States. And just a high degree of caution. And the lack of belief that large institutions would not get — a lot of people thought they would never get properties back. But they’re economic animals. These are non recourse loans, and they’re handing them back. And ultimately it’ll reset, find a new level. And the good part is we are seeing those buildings trade. I mean — and if you start seeing banks selling commercial real estate mortgages at very deep discounts, that’s going to add a little more pressure too. But I think you have to really look at where the lending has taken place.
And I don’t think Ladder will ever be accused of competing in the most competitive markets with other lenders. In fact, we prefer flyover states and smaller populations, which we always felt that the pandemic would actually broaden out the workforce and allow people to stay in St. Louis, stay in Memphis and stay in Houston, rather than move to Los Angeles or New York. So I think that is the disconnect if there is one. And having said that, there’s pressure on all of it. But the work from home item, we’re not really talking about a big difference, because Friday was already done. So what a lot of people are at three and four days a week, you’re seeing a lot of companies go to five days a week now. But the real problem is places like Washington DC, where the federal government is still operating under an emergency COVID protocol.
They are not back at their jobs. They do not go to the office and Starbucks and McDonald’s are closing, in certain cities, not because there’s anything wrong with the city. It’s just that everyone’s staying home. So it’s also probably one of the reasons that apartments will hold up more than people think. And we don’t think the apartment situation isn’t nearly as bad as a lot of people think. The problem with the apartment situation was people were financing three caps at a time when they probably should not have been. If they started looking at them as six caps that normalizes very quickly.
Matthew Howlett: Absolutely. So Brian, do you feel what’s happening in New York Community Bancorp — I mean, is this going to fuel a crisis like, ’08, ’09? And it doesn’t sound like — and do you view it as an opportunity for Ladder? I mean, it’s that more these banks have to sell assets, retreat from the lending. Do you think it’s going to reverse as more banks go down?
Brian Harris: I offer a layman’s opinion on that. I have no inside information, nor do I really think I have it figured out. But you have to — there’s something going on there. Because New York Community Bank was part of the solution around Signature Bank. So you have to assume before the FDIC allowed them to participate in taking assets and deposits from Signature Bank, they took a look at them. And so they must have been healthy less than a year ago. So what happened? Now they do have large loans. And there was some discussion about how one of the loans that caused a big headache was a coop loan in New York. That is nearly inconceivable to me, because coop loans rarely borrow money. And if they do, it’s usually 20% to 30% leverage.
But they do have a lot of rent controlled loans on their balance sheet. And they probably have some office loans that are probably a little too big for them. But so I struggle with it. There seems to be a disconnect there. Something happened later about when they started looking at their portfolio. This isn’t Signature Bank and Silicon Valley Bank having ten year assets that if they sell one, they have to mark the whole book and their capital goes up in flames. This is something different. And I do think they have some defaults that I can’t imagine they didn’t know about them, but I do view this as rather idiosyncratic to them. However, I do think lenders with high concentrations of rent controlled apartments and rent stabilized apartments, given the changes that have taken place in some of these cities, those are going to be problematic.
I don’t think they’re going to be problematic to the point of like putting them out of business. I do think there’ll be some losses there though. And as far as opportunity goes, yeah, I don’t know. I mean, we’ve actually bought loans from New York Community Bank in the past, not in this round. They’re a pretty good lender from what I know of, and so was Signature was a little bit more aggressive, but not bad at all. And we wouldn’t have any trouble buying loans from them if they wanted to sell them. But my suspicion is, they’re going to want to sell office loans in New York, which, which might be a little less comfortable for us.
Matthew Howlett: Yeah, I know there was some packages, now, at least on the residential side and other stuff. Last question, you referenced the bond deal in first half of this year. You’ve been masterful in how you’ve structured the balance sheet, or would you be talking about a CLO or non-secured deal? Just curious, would you want to go tip a little bit towards more floating rate debt? Or do you feel like, you got the way, you have it structured now the fixed rate debt, [ph] you want to keep it exactly the way you’ve done it?
Brian Harris: I think my comment and view is personal that way. I don’t see a new CLO deal going out until we start originating more loans. We have two out there right now. They’re just coming off their managed period. So they’ll start paying down soon. But as far as a new issue, that would be a fixed rate unsecured hopefully longer than seven years, because we do have a 2029 outstanding, which will come due, and we’d like to always take out more term rather than inside of the longest security we’ve got. But given the liquidity situation we’ve got, we’re frankly not going to borrow money, unless it’s cheap. And much to people who invest in mortgage REITs, right now want to lend money because it’s expensive. And so there’s a little bit of a disconnect there. However, we did see some signs of life there. There was a mortgage REIT that it did issue a $1 billion unsecured the other day, at pretty attractive term. What’s that?
Matthew Howlett: Over 7%? Correct. We’re looking at the same one.
Brian Harris: Yeah, yeah, that’s right. I think the name of the company was Mr. Cooper, but — and that tightened about 50 from where the talk was. So there has been a real lack of supply in that market. And I’d like to get involved in that if we can and issue more unsecured corporate debt. However this recent pop in spreads rates and noise around New York Community Bank has probably dashed that for a little while. But I do think as we get out towards, — if the yield curve starts getting a little bit more normalized, where the two year falls again, yeah, we might very well go then. We have to be able to lend money at rates higher than we’re borrowing it at.
