Ready Capital Corporation · NYSE:RC
Ready Capital — Investor Presentation (August 2024)
27 slides from Ready Capital's investor presentation, August 2024
Slide 1: Investor Presentation August 2024
INVESTOR PRESENTATION August 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 $2.4bn ◼ 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 $12.8bn Securities $12.8bn² Ready Capital AUM² 59% AUM 19% 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 ten transactions since 2014, including four public company mergers Funding Small Business Circle US Lending Anworth Mortgage Announcement October 31,
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 ◼ $5.9tn¹ total CRE market value estimate as of 3/31/2024 ◼ 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 management
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 and USDA loans Owner-occupied loans Freddie Mac SBL
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 and USDA loans WA coupon SOFR + 7.75% SOFR + 4.50% 9.25% 6.50% 11.00%
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 ◼ $18.5bn 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 The Falls at Crimson Commons 657 Union Blvd Myrtle Avenue Portfolio Refinance The Valencia Location Mesa, AZ 85209 Totowa, NJ 07512 Ridgeway, NY 11385 Albuquerque, NM 87108 Loan Purpose Constructio
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 16 non-bank Small Business Administration 7(a) license holders; acquired from CIT in 2014 ◼ 2.1% market share with 3% 3-year
Slide 15: Small Business Lending Case Study
Small Business Lending Case Study LOAN AMOUNT: $3,750,000 PRICING BASIS: Variable RATE: 11.50% GUARANTEE: 75% SALE PREMIUM: 11.42% SECURITIZATION 71.70% ADVANCE RATE: SERVICING STRIP: 1.00% DEBT COST: 8.59% Name: Widow Fletchers, LLC LIEN: 1st and 2nd ORIGINATION DATE: December 2023 Location: New Po
Slide 16: Key Credit Highlights
Key Credit Highlights
Slide 17: Loan Portfolio Composition
Loan Portfolio Composition PORTFOLIO BREAKDOWN (BY TOTAL ASSETS)¹ Q2 REVENUE BREAKDOWN ($MM) ¹,² Other 7% $64.0 Small Business Lending 12% $26.2 $6.8 LMM Commercial Real Estate LMM Commercial Real Estate Small Business Lending Other 81% PORTFOLIO KEY METRICS³ ($ in thousands) LOAN TYPE SEGMENT UPB C
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 1.0% Other Texas 24% 20% Ohio California 3% 11% Illinois 4% North Carolina 4% Arizona 8% New York Senior lien 5% Oregon Georgia 99.0% Florida 7% 7% 7% LMM CRE COLLATERAL TYPE ¹ SMALL
Slide 19: LMM CRE Loan Portfolio - Migration
LMM CRE Loan Portfolio - Migration CONTRACTUAL STATUS(1) RISK RATING (1) TOTAL Q4’23 Q1’24 Q2’24 TOTAL Q4’23 Q1’24 Q2’24 CURRENT 88.8% 87.8% 92.8% 30+ DAYS PAST 1&2 65.6% 67.2% 69.5% 1.7% 2.3% 0.9% DUE 60+ DAYS PAST 9.5% 9.9% 6.3% 3 19.3% 22.1% 23.9% DUE RC ORIGINATED Q4’23 Q1’24 Q2’24 4 11.1% 7.6%
Slide 20: Financial Flexibility
Financial Flexibility HIGHLIGHTS CASH ON BALANCE SHEET ($MM) ◼ Diversified unencumbered asset pool of $1.3bn, including $226mm of unrestricted $226 cash $147 $139 ◼ 1.7x 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 3.5x Debt Balance ($ in millions) Ratio ◼ Recourse leverage ratio of 1.0x PPPLF $36 <0.1x $25 <0.1x ◼ 61% of secured borrowings subject to non-recourse or limited recourse terms UNENCUMBERED ASSET POOL $5,068 2.0x
Slide 22: Historical Balance Sheet
Historical Balance Sheet ◼ Ready Capital has grown its balance sheet substantially over its history, with its total assets grown at a 27% CAGR from 2017 to June 2024 ◼ Total debt has largely grown in step with the size of the asset base, comprised of a well diversified mix of corporate borrowing and
Slide 23: Historical Statement of Operations
Historical Statement of Operations ◼ Distributable earnings have grown at a 18% CAGR between 2017 and June 2024¹ ◼ The Company has been able to keep both its earnings to assets and return on equity stable despite challenging economic conditions HISTORICAL PRE-TAX INCOME GROWTH ¹,² ($ millions) NET I
Slide 24: Additional Financial Information
APPENDIX Additional Financial Information
Slide 25: Balance Sheet by Quarter
Balance Sheet by Quarter (in thousands) 6/30/2023 9/30/2023 12/31/2023 3/31/2024 6/30/2024 Assets Cash and cash equivalents $ 197,651 $ 165,731 $ 138,532 $ 166,004 $ 226,286 Restricted cash 29,179 31,498 30,063 24,915 29,971 Loans, net 3,567,588 4,150,251 4,020,160 3,400,481 3,444,879 Loans, held fo
Slide 26: Statement of Income by Quarter
Statement of Income by Quarter (In thousands, except share data) Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 Interest income $ 231,004 $ 248,711 $ 250,130 $ 232,354 $ 234,119 Interest expense (170,221) (189,788) (197,591) (183,805) (183,167) Net interest income before (provision for) recovery of loan lo
Slide 27: Distributable Earnings Reconciliation by Quarter
Distributable Earnings Reconciliation by Quarter (In thousands, except share data) Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 Net Income (loss) $ 253,373 $ 47,179 $ 10,881 $ (74,167) $ (34,201) Reconciling items: Unrealized (gain) loss on MSR - discontinued operations $ (8,818) $ (2,563) $ 20,715 $ — $