Ready Capital reported a $232 million loss in its most recent earnings amid a massive restructuring of its commercial real estate loan book.
Since last year, the firm’s stock has fallen over 60 percent from over $5 to under $2 and has slashed its dividend to $0.01.
As part of its restructuring it is seeking to sell about $1.5 billion of loans to free up $250 million, company executives said on the earnings call. Its net loss of $232 million was still an improvement from its $314 million in the fourth quarter of 2024.
Ready Capital was once a key lender to multi-family syndicators, such as Tides Equities and GVA. Tides, led by Sean Kia and Ryan Andrade, and GVA, led by Alan Stalcup, have faced foreclosures and lawsuits across their portfolios since the Federal Reserve raised interest rates and deal flow dried up.
Ready Capital is now ditching its bad loans and as a result has taken hit after hit to its bottom line. Notably, Ready Capital reported that 25 percent of its outstanding loans, or $1.3 billion, are not accruing interest. This is up from 6.3 percent, or $526 million, last year.
Company executives said the increase in non-accruals was caused by four or five large loans. In these cases borrowers are seeking new lenders or to sell the real estate, instead of a modification or forbearance.
One analyst floated whether the company would sell its coveted license with government-sponsored enterprises such as Freddie Mac. Other lenders, such as Basis Investment Group, have also explored the sale of their multi-family GSE license for up to $200 million, Commercial Mortgage Alert reported.
Ready Capital executives did not specifically discuss a license sale. Rather, CEO Thomas Capasse said the firm is looking at selling “non-core assets.”
One of Ready Capital’s most troubled assets is its beleaguered Ritz-Carlton condo, office and hotel tower in Portland, Oregon, which it seized control of last year after the previous developer defaulted on Ready Capital’s $460 million loan.
The firm replaced the sales team at the 132-unit Ritz-Carlton Residences. So far, only about a quarter of the condo units have sold or are under contract, the firm said on its earnings call.
Other lenders like Walker & Dunlop have been experiencing pain in the multifamily segment because of borrower fraud. Ready Capital, however, did not report any instances of fraud in its earnings.
Overall, Ready Capital’s book value declined to $8.79 per share in the fourth quarter compared to $10.28 per share the prior quarter.
“We continue to execute on our liquidity plan with a focus on meeting our corporate obligations and repositioning the Company’s equity away from Covid-vintage production,” said Capasse.
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