Ready Capital Corporation Q1 FY2025 earnings call

• Macro backdrop: CRE market recovery affected by tariffs and recession risks, but multifamily sector muted; rents up 1% in 1Q 2025. - Asset repositioning: Initiated defensive posture in Q4, reset balance sheet; book value per share flat at $10.61. - Core portfolio: $5.9 billion, 78% multifamily, 5% decline quarter-over-quarter, 18% modified loans. - Non-core: Exceeded liquidation targets, reduced portfolio by 6%, expects further reduction. - UDF merger: Added $167.1 million equity, 1.3% accretive to book value, booked $102.5 million bargain purchase gain. - Balance sheet: Transferred $722.8 million loans to held for sale, collapsed 3 CRE CLOs, reduced short-term debt maturities, closed $220 million senior secured offering.

The company's CRE loan portfolio is $7.1 billion, bifurcated into $5.9 billion core (78% concentration in multifamily, 1,400 loans, credit metrics healthy with 4% 60+ day delinquencies) and $1.2 billion non-core. Non-core bridge loan portfolio liquidated $51 million at 102% premium, reducing portfolio by 6% to $740 million in Q1, expecting to reduce to ~$270 million in Q2 and $210 million by year-end 2025. SBA business had $343 million volume in Q1, with moderation expected ahead due to policy updates.

• Expect non-core portfolio to be further reduced to ~$270 million in Q2 and $210 million by year-end 2025. - Anticipate SBA volume to be below $1.5 billion in 2025 due to current capital constraints. - Repositioning plan expected to be executed in 2025 with accretion in 2026. - Dividend to remain at current level absent further material macro deterioration until earnings profile warrants increase.

• Macro economic environment deterioration risk impacting CRE market. - Volatility in non-core asset dispositions affecting expected liquidation timelines and prices. - Uncertainty in SBA business volumes due to policy changes. - Pressure on CLOs due to NOI impacts, interest coverage tests, and modifications, affecting leverage and liquidity. - Refinancing risk related to corporate debt maturities.

Q: Receptivity of debt capital markets?

A: Confident in ability to refinance debt, unsecured debt except $350 million next year, unencumbered assets provide room for secured refinance