Ready Capital Corporation · NYSE:RC
Ready Capital — Investor Presentation (May 2024)
30 slides from Ready Capital's investor presentation, May 2024
Slide 1: Investor Presentation May 2024
INVESTOR PRESENTATION May 2024
Slide 2: Disclaimer
Disclaimer These materials and any presentation of which they form a part are not intended as an offer to sell, or the solicitation of an offer to purchase, any security, the offer and/or sale of which can only be made by definitive offering documentation. Any offer or solicitation with respect to a
Slide 3: Executive Summary
Executive Summary ◼ Ready Capital (“RC” or the “Company”) is a non-bank lender to both investors in and owners of lower-to-middle-market (LMM) commercial real estate (CRE) properties with book value of approximately $2.5bn ◼ All-weather investment strategy as a direct lender and acquirer of loan por
Slide 4: Business Overview
~ READY CAPITAL Business Overview
Slide 5: Company Overview
Company Overview Multi-strategy real estate finance company that originates, acquires and services LMM investor and owner occupied commercial real estate loans ▪ Acquires and originates LMM loans secured by stabilized or transitional investor properties using multiple loan origination channels; gene
Slide 6: A Successful and Proven Asset Manager
A Successful and Proven Asset Manager WATERFALL ASSETS UNDER MANAGEMENT BY STRATEGY¹ Real Estate Private Equity 4% 1% Loans 19 year 17% Investment record Asset-Backed Securities $12.6bn $12.6bn² Ready Capital AUM² 58% AUM 20% 150+ Employees WATERFALL OVERVIEW ◼ SEC-registered credit investment advis
Slide 7: Proven Acquisition and Integration Track Record
Proven Acquisition and Integration Track Record Ready Capital is an active acquiror in the multi-strategy real estate finance sector, having completed eight transactions since 2014, including four public company mergers Small Business Lending Anworth Mortgage Announcement November 8, December 7, Nov
Slide 8: Market Segment Overview
"READY CAPITAL Market Segment Overview
Slide 9: Overview of Key Themes by Market Segment
Overview of Key Themes by Market Segment ◼ $5.8tn¹ is the total CRE market value estimate as of 6/30/2023 ◼ Retrenchment of Banks from LMM CRE market provides increased opportunity LMM Commercial Real Estate ◼ Competition for LMM CRE loan asset acquisitions has been limited due to the portfolio mana
Slide 10: Full Project Life Cycle Lender With Diverse Set of Solutions
Full Project Life Cycle Lender With Diverse Set of Solutions GOVERNMENT-BACKED FULL PROJECT LIFE CYCLE LMM COMMERCIAL REAL ESTATE SMALL BUSINESS LENDING Government-backed Small Product Construction Bridge Fixed Rate/CMBS Freddie Mac Business loans Freddie Mac SBL Construction and pre- Short-term fin
Slide 11: Breakdown of Investment Strategy Economics
Breakdown of Investment Strategy Economics GOVERNMENT-BACKED FULL PROJECT LIFE CYCLE LMM COMMERCIAL REAL ESTATE SMALL BUSINESS LENDING Government-backed Small Product Construction Bridge Fixed Rate/CMBS Freddie Mac Business loans WA coupon SOFR + 7.75% SOFR + 4.50% 9.25% 6.50% 11.00% Fees % 1.00% 1.
Slide 12: LMM Commercial Real Estate Overview
LMM Commercial Real Estate Overview OVERVIEW ◼ All weather origination platform with ability to allocate capital across 4 products ◼ $18.3bn in originations since the Company’s formation in 2013¹ ◼ Current 0.4% LMM CRE loan market share with 1.5% 3-year target ◼ Conservative approach to credit with
Slide 13: LMM Commercial Real Estate Case Studies
LMM Commercial Real Estate Case Studies Construction Bridge Non-Agency Fixed Rate Freddie Mac SBL Name Cross-Kire East 159-161 West 54th Street Myrtle Avenue Portfolio Refinance The Valencia Location Escondido, CA 92025 New York, NY 10019 Ridgeway, NY 11385 Albuquerque, NM 87108 Loan Purpose Constru
Slide 14: Small Business Lending Overview
Small Business Lending Overview OVERVIEW ◼ A leading provider of capital to small businesses through 7(a) loans and USDA loans ◼ #1 non-bank and #4 overall 7(a) lender¹ ◼ 1 of 17 non-bank Small Business Administration 7(a) license holders; acquired from CIT in 2014 ◼ 2.3% market share with 3% 3-year
Slide 15: Small Business Lending Case Study
Small Business Lending Case Study LOAN AMOUNT: $3,750,000 PRICING BASIS: Variable RATE: 11.50% GUARANTEE: 75% SALE PREMIUM: 11.42% SECURITIZATION 71.70% ADVANCE RATE: SERVICING STRIP: 1.00% DEBT COST: 8.59% Name: Widow Fletchers, LLC LIEN: 1st and 2nd ORIGINATION DATE: December 2023 Location: New Po
Slide 16: Key Credit Highlights
Key Credit Highlights
Slide 17: Loan Portfolio Composition
Loan Portfolio Composition PORTFOLIO BREAKDOWN (BY TOTAL ASSETS)¹ Q1 REVENUE BREAKDOWN ($MM) ¹,² Other 7% $62.4 Small Business Lending 11% $23.3 $11.9 LMM Commercial Real Estate LMM Commercial Real Estate Small Business Lending Other 82% PORTFOLIO KEY METRICS³ ($ in thousands) LOAN TYPE SEGMENT UPB
Slide 18: Loan Portfolio Composition (Cont'd)
Loan Portfolio Composition (Cont’d) LMM CRE GEOGRAPHIC LOCATION ¹ LIEN POSITION OF TOTAL PORTOLIO ¹ Subordinated lien 2.2% Texas Other 19% 29% California 11% Ohio 3% Illinois Arizona 4% 7% North Carolina Georgia Senior lien 4% 6% 97.8% New York Florida Oregon 5% 6% 6% LMM CRE COLLATERAL TYPE ¹ SMALL
Slide 19: LMM Commercial Real Estate Loan Portfolio - Migration
LMM Commercial Real Estate Loan Portfolio - Migration CONTRACTUAL STATUS(1) RISK RATING (1) TOTAL Q4’23 Q1’24 TOTAL Q4’23 Q1’24 CURRENT 88.8% 87.8% 30+ DAYS PAST DUE 1.7% 2.3% 1&2 65.6% 67.2% 60+ DAYS PAST DUE 9.5% 9.9% 3 19.3% 22.1% RC ORIGINATED Q4’23 Q1’24 CURRENT 92.1% 89.9% 4 11.1% 7.6% 30+ DAY
Slide 20: Financial Flexibility
Financial Flexibility HIGHLIGHTS CASH ON BALANCE SHEET ($MM) ◼ Diversified unencumbered asset pool of $1.4bn, including $166mm of unrestricted cash $166 $147 $139 ◼ 1.9x unencumbered assets to unsecured debt 2022 2023 2024 ◼ $2.9bn in available warehouse borrowing AVAILABLE WAREHOUSE BORROWINGS ($MM
Slide 21: Financial Flexibility (Cont'd)
Financial Flexibility (Cont’d) LEVERAGE PROFILE OVERVIEW Leverage ◼ Total leverage of 3.4x Debt Balance Ratio ◼ Recourse leverage ratio of 0.9x PPPLF $36 <0.1x $28 <0.1x ◼ Majority of secured borrowings subject to non-recourse or limited recourse terms UNENCUMBERED ASSET POOL $5,068 2.0x Other Asset
Slide 22: Historical Balance Sheet
Historical Balance Sheet ◼ Ready Capital has grown its balance sheet substantially over its history, with its total assets grown at a 28% CAGR from 2017 to March 2024 ◼ Total debt has largely grown in step with the size of the asset base, comprised of a well diversified mix of corporate borrowing an
Slide 23: Historical Statement of Operations
Historical Statement of Operations ◼ Distributable earnings have grown at a 28% CAGR between 2017 and March 2024¹ ◼ The Company has been able to keep both its earnings to assets and return on equity stable despite some challenging economic conditions HISTORICAL PRE-TAX INCOME GROWTH ¹,² ($ millions)
Slide 24: Credit Philosophy
Credit Philosophy GEOtier Real Estate Debt Structure Sponsor ◼ Tiers markets from 1 to 5 based on ◼ Primarily focused on less volatile ◼ Primary metrics considered: At Risk ◼ Strong sponsorship cannot mitigate zip code level; utilized for pricing, property types such as multifamily LTV, As-Is LTV, G
Slide 25: Strong Credit Risk and Asset Management Culture
Strong Credit Risk and Asset Management Culture EARLY INTERVENTION COMPREHENSIVE REPORTING ◼ Ready Capital communicates directly with sponsors to ascertain status for loans ◼ Asset-level assessments contained in the Watchlist report help drive over 30+ days delinquent communication with warehouse co
Slide 26: Experienced Management Team
Experienced Management Team NAME & POSITION BACKGROUND Thomas Capasse Chairman of the Board, CEO & ◼ Manager and Co-Founder of Waterfall Asset Management Managing Partner and Co-Founder Chief Investment Officer ◼ 35+ years of structured credit experience globally Waterfall Asset Management Ready Cap
Slide 27: Additional Financial Information
APPENDIX Additional Financial Information
Slide 28: Balance Sheet by Quarter
READY CAPITAL. Balance Sheet by Quarter Cash and cash equivalents s 59863 197651 $ 165,731 $ 138,532 $ 166,004 Restricted cash 43,736 29,179 31,498 30,063 24,915 Loans, net 3,123,051 3,567,588 4,150,251 4,020,160 3,400,481 Loans, held for sale 116,879 104,496 74,655 81,599 584,072 Mortgage-backed se
Slide 29: Statement of Income by Quarter
Statement of Income by Quarter 29
Slide 30: Distributable Earnings Reconciliation by Quarter
Distributable Earnings Reconciliation by Quarter The Company believes that this non-U.S. GAAP financial information, in addition to the related U.S. GAAP measures, provides investors greater transparency into the information used by management in its financial and operational decision-making, includ