Ready Capital Corp. (RC, Financials) shares fell 28.5% to $4.95 as of March 3, 2:39 p.m. GMT-5, after the company reported a fourth-quarter loss of $1.90 per share and announced a dividend cut to $0.125 per share for the first quarter of 2025. Key objectives listed by management include long-term balance sheet stability and maintenance of liquidity.

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With asset sale losses excluded, the business posted a distributable loss of $0.03 per share; distributable profits, then, were at $0.23 per share, showing a 7.1% return on equity. Driven by a 7% drop in portfolio assets and a rise in non-accrual loans to 4.6%, revenue from core operations fell 12% to $91.6 million. A 14% drop in book value per share to $10.61 resulted from the $253.8 million increase in loan loss and valuation allowance provision. Ready Capital raised $350 million with corporate financing and recorded $185 million in unrestricted cash.

Working to stabilize book value per share, CEO Thomas Capasse said the business is actively provisioning against issue loans. To increase liquidity and finance higher-yielding loans, management detailed plans to sell 17% of its non-core commercial real estate assets over the next seven to 10 quarters.

Targeting lower middle-market prospects, new commercial real estate loan originations for 2025 are predicted between $1 billion and $1.5 billion. With complete realization in 2026, the business hopes the liquidation of non-core assets to provide $0.18 per share in yearly profits. While USDA loan (Madison One) is estimated at $300 million and adds another $0.05 per share, SBA 7(a) lending is projected at $1.5 billion and contributes $0.05 per share. Anticipated to completion in March, the proposed UDF IV merger is predicted to yield $0.17 per share in yearly income.

Supported by cost cuts and SBA/USDA loan growth, CFO Andrew Ahlborn said Ready Capital anticipates 1.5x dividend coverage by year-end. Aggressive discounting on UDF IV troubled assets guarantees credit security and accretive profits, management highlighted. SBA loans had 2.8% of delinquencies; housing assets were doing quite well. Resolution times are becoming better because to CLO specific servicing changes.

Analysts voiced worries about the UDF IV merger's uncertainties and dividend cut. Rising long-term rates might aggravate commercial real estate refinancing already under strain. Still, there remained hope regarding Ready Capital's smart liquidation of non-core businesses and SBA loan increase.

Ready Capital's fourth-quarter strategy showed more urgency in handling balance sheet problems than its third-quarter one, thereby changing its emphasis from stabilizing the commercial real estate sector to managing distressed assets and improving liquidity.

By means of SBA and USDA loan expansion, non-core asset disposal, and M&A-driven profits growth from the UDF IV merger, Ready Capital is poised for recovery while posting significant losses and slashing its dividend. Management forecasts profitability and stability in liquidity by 2025; complete recovery by 2026.