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1. Company Snapshot

1.a. Company Description

Ready Capital Corporation operates as a real estate finance company in the United States.The company acquires, originates, manages, services, and finances small to medium balance commercial (SBC) loans, small business administration (SBA) loans, residential mortgage loans, and mortgage backed securities collateralized primarily by SBC loans, or other real estate-related investments.It operates through three segments: SBC Lending and Acquisitions; Small Business Lending; and Residential Mortgage Banking.


The SBC Lending and Acquisitions segment, through its subsidiary, ReadyCap Commercial, LLC, originate SBC loans secured by stabilized or transitional investor properties using various loan origination channels.The Small Business Lending segment, through its subsidiary, ReadyCap Lending, LLC, acquires, originates, and services owner-occupied loans guaranteed by the SBA under its SBA Section 7(a) Program.The Residential Mortgage Banking segment, through its subsidiary, GMFS, LLC, originates residential mortgage loans.


The company qualifies as a real estate investment trust for federal income tax purposes.It generally would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders.The company was formerly known as Sutherland Asset Management Corporation and changed its name to Ready Capital Corporation in September 2018.


Ready Capital Corporation was founded in 2007 and is headquartered in New York, New York.

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1.b. Last Insights on RC

Ready Capital Corporation's recent performance was negatively impacted by a significant quarterly loss of $0.94 per share, missing revenue estimates. The company's distributable loss per common share was $0.94, with a GAAP loss per common share from continuing operations of $(0.13). Brokerages have a consensus "Reduce" rating on the stock, with two sell and six hold recommendations. Additionally, Clear Harbor Asset Management LLC reduced its holdings by 44.6% in Q3. The company's dividend payout of $0.01 per share, though, may attract income-seeking investors.

1.c. Company Highlights

2. Ready Capital Corporation's Repositioning Strategy Unfolds with Mixed Q4 Results

The company's Q4 financial performance was marked by a GAAP loss from continuing operations of $1.46 per common share, while distributable earnings were a loss of $0.43 per common share. However, distributable earnings excluding realized losses on asset sales came in at -$0.09 per share, beating analyst estimates of -$0.11 per share. Revenue growth for next year is estimated at 20.7% by analysts, indicating a potential turnaround.

Publication Date: Mar -05

📋 Highlights
  • Liquidity Target Progress: Generated $380M in free cash (33% of $850M target) through $130M in bulk sales and $250M in runoff by Q4.
  • Portfolio Reduction: Aim to shrink legacy CRE book by 60% ($2B remaining) via $1.4B in sub/nonperforming loan/REO resolutions, reducing quarterly losses by $0.08/share.
  • Debt Management: Liquidity plan exceeds $800M to cover $517M in 2024 maturities, with $500M from $1.5B in planned loan sales (NPLs/sub-yielders) by Q2.
  • Ritz Property Sales: Sold 27% of 132 units (25 under contract, 9 with deposits), aligning with phased pricing strategy to maximize value.
  • SBA Growth Strategy: Positioned as top-5 SBA lender, planning 4th securitization in Q2 to leverage high-ROE, low-capital business line.

Liquidity Plan and Balance Sheet Repositioning

Ready Capital Corporation has made significant progress in executing its liquidity plan, generating approximately $380 million in free cash from the start of the fourth quarter to date, primarily from bulk portfolio sales and portfolio runoff. The company expects to generate an additional $500 million in free cash flow by year-end, with a focus on selling non-performing and sub-yielding assets. As of today, they have generated around 35% of their target liquidity objective, positioning them well to address near-term obligations.

CRE Portfolio Repositioning and Asset Management

The company is aggressively managing its CRE portfolio, with a focus on selling or resolving approximately $1.4 billion of sub- and non-performing loans and REO assets. This repositioning is expected to result in a more attractive portfolio with a competitive earnings profile. Dominic Scally's promotion to Chief Credit Officer and Co-President of the CRE operating business is a strategic move to lead these efforts.

Valuation and Leverage

With a Price-to-Book Ratio of 0.22, the market is pricing in significant distress. The company's leverage ratio is expected to decrease by one turn to 2.5x through repositioning and dispositions. The pro forma Ready Capital Corporation is anticipated to involve significantly less leverage with a multisector approach, potentially leading to a more stable financial profile.

Growth Prospects and Capital Allocation

The company is shifting its capital allocation towards its capital-light small business lending operations, increasing it from 10% to 20%. The SBA business remains a high priority due to its high return on equity and low capital allocation. With a Dividend Yield of 18.6%, the stock may attract income investors. The anticipated growth in the SBA business and the repositioning of the CRE portfolio are expected to drive future earnings growth.

3. NewsRoom

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Ready Capital Corporation Provides Business Update

Apr -01

Source: globenewswire.com

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Analyzing Generation Income Properties (NASDAQ:GIPR) & Ready Capital (NYSE:RC)

Mar -30

Source: defenseworld.net

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Waterfall Asset Management Originates $19.5 Million Loan to Support Acquisition of Greenwich Village Retail Property

Mar -27

Source: prnewswire.com

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Ready Capital Corp (NYSE:RC) Receives Consensus Recommendation of “Reduce” from Brokerages

Mar -23

Source: defenseworld.net

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Financial Survey: Ready Capital (NYSE:RC) versus ARMOUR Residential REIT (NYSE:ARR)

Mar -20

Source: defenseworld.net

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Waterfall Asset Management Provides $127 Million Refinancing for Chesterbrook Office Campus

Mar -17

Source: prnewswire.com

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Ready Capital Corporation Declares First Quarter 2026 Dividends

Mar -13

Source: globenewswire.com

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Ready Capital: 14% YTM Bonds Offer The Best Risk-Reward

Mar -02

Source: seekingalpha.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (8.79%)

6. Segments

Lower-to-middle-market Commercial Real Estate

Expected Growth: 8.33%

Ready Capital Corporation's 8.33% growth in Lower-to-middle-market Commercial Real Estate is driven by increasing demand for flexible financing options, rising property values, and a strong economy. Additionally, the company's expertise in small-balance commercial lending and strategic partnerships contribute to its growth. Furthermore, the growing need for renovation and construction loans in this segment also fuels the company's expansion.

Corporate - Other

Expected Growth: 9.33%

Ready Capital Corporation's 9.33% growth in Corporate - Other segment is driven by increasing demand for commercial mortgage banking services, expansion of small business lending, and growth in mortgage loan originations. Additionally, the company's strategic acquisitions and partnerships have contributed to the segment's growth.

Small Business Lending

Expected Growth: 10.27%

Ready Capital Corporation's 10.27% growth in small business lending is driven by increasing demand for alternative financing options, expansion into new markets, and strategic partnerships. Additionally, the company's technology-enabled platform and efficient underwriting process have improved customer experience, leading to increased adoption and retention rates.

7. Detailed Products

Small Business Administration (SBA) Loans

Ready Capital Corporation offers SBA loans to small businesses, providing financing for various business purposes such as expansion, acquisition, and refinancing.

Commercial Mortgage Loans

Ready Capital Corporation provides commercial mortgage loans for property owners and investors, offering financing for acquisition, refinance, and cash-out of commercial properties.

Bridge Loans

Ready Capital Corporation offers bridge loans to provide short-term financing for commercial properties, allowing borrowers to quickly access capital for time-sensitive transactions.

Construction Loans

Ready Capital Corporation provides construction loans for developers and builders, offering financing for ground-up construction, renovation, and redevelopment projects.

Multifamily Loans

Ready Capital Corporation offers multifamily loans for apartment building owners and investors, providing financing for acquisition, refinance, and rehabilitation of multifamily properties.

8. Ready Capital Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

Ready Capital Corporation operates in a niche market, providing financing solutions to small businesses. While there are substitutes available, the company's specialized services and strong relationships with its customers reduce the threat of substitutes.

Bargaining Power Of Customers

Ready Capital Corporation's customers are small businesses, which have limited bargaining power due to their size and dependence on the company's financing solutions.

Bargaining Power Of Suppliers

Ready Capital Corporation has a diversified supplier base, which reduces the bargaining power of individual suppliers. The company's strong financial position also gives it negotiating power with its suppliers.

Threat Of New Entrants

The financing industry has high barriers to entry, including regulatory requirements and the need for significant capital. This reduces the threat of new entrants in the market.

Intensity Of Rivalry

The financing industry is competitive, with several established players. However, Ready Capital Corporation's specialized services and strong relationships with its customers help it to differentiate itself from its competitors.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 78.63%
Debt Cost 7.93%
Equity Weight 21.37%
Equity Cost 11.19%
WACC 8.62%
Leverage 367.85%

11. Quality Control: Ready Capital Corporation passed 2 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Ladder Capital

A-Score: 6.6/10

Value: 5.8

Growth: 4.2

Quality: 5.4

Yield: 10.0

Momentum: 4.5

Volatility: 9.7

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Two Harbors Investment

A-Score: 6.2/10

Value: 8.8

Growth: 3.4

Quality: 4.0

Yield: 10.0

Momentum: 3.5

Volatility: 7.3

1-Year Total Return ->

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Redwood Trust

A-Score: 5.9/10

Value: 6.8

Growth: 3.9

Quality: 4.4

Yield: 10.0

Momentum: 3.0

Volatility: 7.0

1-Year Total Return ->

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Ellington Residential Mortgage REIT

A-Score: 5.7/10

Value: 3.9

Growth: 3.0

Quality: 4.8

Yield: 10.0

Momentum: 3.5

Volatility: 9.0

1-Year Total Return ->

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Ready Capital

A-Score: 5.2/10

Value: 7.6

Growth: 5.4

Quality: 2.8

Yield: 10.0

Momentum: 0.5

Volatility: 4.7

1-Year Total Return ->

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ACRES Commercial Realty

A-Score: 4.9/10

Value: 7.3

Growth: 4.1

Quality: 3.1

Yield: 0.0

Momentum: 8.0

Volatility: 7.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

1.62$

Current Price

1.62$

Potential

-0.00%

Expected Cash-Flows