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Introduction & Market Context
Ready Capital Corporation (NYSE:RC) released its Q1 2025 supplemental financial data presentation on May 9, 2025, revealing a mixed performance as the commercial real estate lender continues its recovery efforts following a challenging Q4 2024. The company’s stock closed at $4.38 on May 8, trading near its 52-week low of $4.16, reflecting ongoing investor concerns despite some signs of stabilization.
The presentation comes after a difficult fourth quarter of 2024, when Ready Capital reported a significant GAAP loss of $1.90 per share and cut its dividend to $0.125 per share. While Q1 2025 shows improvement in certain metrics, the company continues to face headwinds in its loan portfolio, particularly in non-core assets.
Quarterly Performance Highlights
Ready Capital reported net income from continuing operations of $0.47 per common share for Q1 2025, a notable improvement from the previous quarter’s substantial loss. However, distributable losses were $(0.09) per common share, and distributable earnings before realized losses were $0.00 per common share, indicating ongoing challenges in core operations.
The company maintained its quarterly dividend at $0.125 per share, consistent with the reduced level established in Q4 2024. Book value per share remained stable at $10.61, supported by the accretive acquisition of United Development Funding IV and share repurchases that offset the impact of distributable losses.
As shown in the following summary of first quarter results:
The total loan portfolio stood at $8.4 billion, with a weighted average yield of 8.3% in the $5.9 billion CRE core portfolio. Loan originations totaled $466.1 million during the quarter, while repayments and sales reached $758.2 million, indicating a net reduction in the portfolio size as the company continues to manage risk exposure.
Portfolio Management Strategy
Ready Capital’s presentation revealed a clear segmentation of its commercial real estate portfolio into core, non-core, and the Portland mixed-use project (Ritz-Carlton). This stratification highlights the company’s focused approach to managing credit quality and optimizing returns.
The following portfolio review illustrates the significant differences in performance between these segments:
The core portfolio, representing the majority of Ready Capital’s CRE exposure at $5.88 billion, showed relatively stable performance with 60+ day delinquencies at 4.1% and a weighted average risk rating of 2.37. In contrast, the non-core portfolio of $740 million exhibited significantly higher stress with 40.9% delinquency and a risk rating of 4.21.
The Portland mixed-use project, which includes the Ritz-Carlton hotel, remains a particular challenge with 100% delinquency status. Ready Capital provided detailed information on this $430 million asset, noting that construction is complete and the hotel opened in October 2023, but the loan matured on December 31, 2024. The company indicated it is "expeditiously working on an amicable solution with the Borrower" and believes ownership represents the best net present value outcome.
For the non-core portfolio, Ready Capital has established clear exit timelines, with 40% of the carry value expected to be resolved by Q2 2025:
Capital Structure and Liquidity
Ready Capital’s financial position shows a total leverage ratio of 3.5x and a recourse leverage ratio of 1.3x. The company highlighted its liquidity position with $1.8 billion in available warehouse borrowing capacity and a 1.2x ratio of unencumbered assets to unsecured debt.
The following waterfall chart illustrates the stability in book value per share, which remained at $10.61 from Q4 2024 to Q1 2025, despite distributable losses:
The acquisition of United Development Funding IV for $167 million contributed $0.14 per share to book value, while share repurchases of 3.4 million shares at an average price of $5.02 added $0.11 per share, offsetting the negative impact of distributable losses and dividend payments.
Ready Capital’s capitalization structure shows diversified funding sources, with a focus on reducing mark-to-market liabilities:
During the quarter, the company collapsed three securitizations, generating $78 million in liquidity, and closed a $220 million senior secured offering, demonstrating continued access to capital markets despite challenging conditions.
Forward Outlook
Ready Capital’s comprehensive financial snapshot provides insight into the company’s positioning for future quarters:
The presentation suggests Ready Capital is focused on stabilizing its core operations while methodically working through its challenged assets. The company’s small business lending segment continues to provide diversification from commercial real estate exposure, with the financial snapshot showing the performance metrics for both business lines.
While the presentation does not provide explicit forward guidance, the detailed exit strategies for non-core assets and the Portland mixed-use project indicate a multi-year path to full portfolio rationalization. For the Portland property specifically, Ready Capital outlined a sequential exit strategy for the commercial component (2 years), hotel component (2 years), and residential condos (3-year linear sell-out period).
The Q1 2025 results show modest improvement from the significant challenges faced in Q4 2024, but distributable losses indicate Ready Capital still faces headwinds in achieving sustainable profitability. Investors will likely focus on the company’s execution of its non-core asset disposition strategy and the performance of its core portfolio in upcoming quarters as key indicators of long-term recovery potential.
Full presentation:
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