Ready Capital Corporation · NYSE:RC
Ready Capital — ZAIS Financial — Merger or Acquisition (April 2016)
17 slides from Ready Capital's merger presentation, Apr 7, 2016
Slide 1: ZAIS Financial Corp. to combine with Sutherland Asset Management Corp.
ZAIS Financial Corp. to combine with Sutherland Asset Management Corp. Merger Presentation April 7, 2016 Exhibit 99.2
Slide 2: Transaction Overview
Transaction Overview Creates a publicly - traded REIT platform focused on small balance commercial mortgages 2 (1) Based on 12/31/15 respective reported book values. ▪ Sutherland Asset Management (“SAM”) and ZAIS Financial Corp (“ZFC”) have entered into a definitive merger agreement ▪ Following both
Slide 3: Transaction Overview (cont'd): Exchange Ratio and Cash Tender
▪ The number of ZFC shares to be received by SAM stockholders will be based on an exchange ratio determined by dividing the SAM Adjusted Book Value per share by the ZFC Adjusted Book Value per share (“BVPS”). The final exchange ratio and the per share cash tender offer price will be subject to adjus
Slide 4: Strategic Rationale/Investment Highlights
Strategic Rationale/Investment Highlights 1 2 3 4 Expanded capital base redeployed in attractive small balance commercial real estate assets, which include newly originated and distressed legacy mortgages Compelling risk - adjusted returns due to underserved and fragmented small balance commercial m
Slide 5: Summary Transaction Structure
Summary Transaction Structure 5 ▪ ZFC will form Merger Sub, a wholly - owned subsidiary of ZFC ▪ SAM will merge into Merger Sub in exchange for ZFC shares, with Merger Sub being the surviving entity ▪ ZFC to be renamed Sutherland Asset Management Corporation; Merger Sub to be renamed Sutherland Asse
Slide 6: ZFC Overview
52% 16% 15% 6% 12% ZFC Overview Core Earnings (2) and Dividends per Share Business Description ▪ ZFC is a Maryland corporation that originates, acquires, finances, sells, services and manages residential mortgage assets ▪ Originates, sells and services residential mortgage loans through its mortgage
Slide 7: SAM Overview
SAM Overview ▪ SAM is a Maryland corporation formed on November 4, 2013. The Company is externally - managed and advised by Waterfall ▪ SAM mainly acquires, originates, manages, services and finances small balance commercial (“SBC”) loans, Small Business Administration (“SBA”) loans and mortgage bac
Slide 8: SAM Business Overview
SAM Business Overview 8 Loan Acquisition Business Origination Business(s) Conventional Loans Bridge Loans Freddie Mac SBL Program SBA 7(a) Booking Entity: Sutherland ReadyCap Commercial ReadyCap Lending Principal Business Activity / Secured by: Acquires pools of performing, sub - performing, and non
Slide 9: Waterfall Overview
Waterfall Overview Loan Strategies $1.1B net AUM (as of 12/31/15) - Sutherland - Victoria - Olympic - Separate accounts ABS Strategies $4.3B net AUM (as of 12/31/15) - Eden funds - Separate accounts Jack Ross Principal, Co - founder Thomas Capasse Principal, Co - founder ▪ SEC - registered credit in
Slide 10: SAM Operating & Financial Metrics
SAM Operating & Financial Metrics 10 Loan Originations ($MM) Acquired Loans ($MM) Total Assets ($MM) Servicing UPB ($MM) $611.8 $591.4 $580.5 $625.2 $571.5 $612.7 $400.0 $450.0 $500.0 $550.0 $600.0 $650.0 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 $911.7 $1,040.1 $987.3 $926.6 $913.3 $927.9 $800.0 $850.0 $
Slide 11: Net Interest Margin, Leverage, Core ROE, Core EPS and Book Value
11 Net Interest Margin (%) Leverage & Core Return on Equity Core EPS (2) & Dividends Per Share ($) Book Value Per Share ($) Core ROE (1) (2) : 12.1% 10.8% 8.9% 8.8% 11.0% 11.7% (1) Represents annualized return for quarter ended, calculated as quarterly core net income divided by average common share
Slide 12: Q4 2015 SAM Portfolio Snapshot
14% 12% 11% 8% 6% 5% 4% 3% 3% 34% Texas California Florida New York Arizona Georgia North Carolina Virginia Pennslyvania Other Q4 2015 SAM Portfolio Snapshot Portfolio Yield Analysis Investment Type Avg. Carrying Value (1) Gross Yield (2) Avg. Debt Cost (1) Debt Cost Return on Equity Acquired portfo
Slide 13: Waterfall Management Agreement Further Aligns Stakeholder Interests
Waterfall Management Agreement Further Aligns Stakeholder Interests ZFC Management Fee Waterfall Management Fee Tiered Base Management Fee of 1.5% of stockholders’ equity for the first $500 million in equity 1.0% of stockholders’ equity for equity above $500 million Incentive Fee of 15% of Excess Ea
Slide 14: Conclusion
Conclusion ▪ Creates a publicly - traded mortgage REIT focused on small balance commercial mortgages ▪ Primary focus will remain small balance commercial lending with ~10% target equity allocation to residential mortgage assets ▪ Significantly increases scale and creates a combined company with a st
Slide 15: ZFC GAAP to Core Earnings Reconciliation
(1) Amount is less than $1,000. (2) Per weighted average shares outstanding. 15 ZFC GAAP to Core Earnings Reconciliation (Dollars in thousands, except for per share amounts) (1) Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Net (loss)/income - U.S. GAAP after income taxes $1,280 $217 $417 $6,710 ($6,711) ($1,
Slide 16: SAM GAAP to Core Earnings Reconciliation
SAM GAAP to Core Earnings Reconciliation 16 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Net income - U.S. GAAP after income taxes $13,236 $13,823 $9,742 $12,721 $13,387 $8,919 Reconciling items: Unrealized (gain) loss on mortgage-backed securities 252 (415) (143) (377) 1,301 3,754 Gain on sale of SBA licens
Slide 17: Disclaimer: Forward-Looking Statements
Disclaimer Forward - Looking Statements ▪ This presentation contains statements that constitute “forward - looking statements,” as such term is defined in Section 27A of th e Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and such statements a