A Texas-based REIT with a troubled history has a new opportunity.
New York real estate finance firm Ready Capital plans to acquire United Development Funding IV in a deal valued at $181 million, the Dallas Business Journal reported
United Development Funding IV has long been a significant player in financing single-family residential developments, originating $1.6 billion in loans since 2008. These funds have facilitated the creation of 62,000 residential lots and 1,000 homes in Austin, Dallas-Fort Worth, Houston and San Antonio.
Major master-planned communities it has financed in North Texas include the 448-acre Valencia on the Lake and the 300-acre Frisco Hills, both in Little Elm. However, the firm has faced considerable challenges, including a federal criminal case in 2022.
The convictions of then-CEO Hollis Greenlaw and three other former executives on charges including securities fraud cast a shadow over the company’s legacy. New leadership under CEO James Kenney sought to stabilize and reposition the firm, ultimately culminating in the acquisition agreement with Ready Capital.
The merger, if approved, will “unlock exciting growth and value creation opportunities,” said Ready Capital CEO Thomas Capasse.
“The UDF IV transaction will allow us to scale our portfolio and expand our core business,” he said.
Ready Capital, a major lender to multifamily syndicators, had sold $20 million in loans for cents on the dollar by the third quarter, with another $450 million in contracts.
Shareholders of the Irving-based REIT stand to benefit from the merger. They would receive a pre-closing cash distribution of up to $75 million and shares in Ready Capital, valued at $3.07 per UDF IV share. Post-distribution, shareholders will receive Ready Capital stock, resulting in a combined ownership stake of approximately 7 percent.
“The transaction provides liquidity and positions our shareholders to benefit from ownership in an industry leader,” Kenney said.
The combined entity would operate under the Ready Capital name, retaining its New York headquarters. The deal is expected to close next year, pending shareholder and regulatory approvals.
—Andrew Terrell
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