Ready Capital's Q3 2025: Diverging Views on Dividends, SBA Lending, and Unsecured Issuances

Portfolio Repositioning and Asset Sales:
- Ready Capital completed a significant sale of $494 million in multifamily bridge assets, generating $85 million in net proceeds.
- This transaction is part of a broader strategy to eliminate underperforming assets and improve net interest margin, with the proceeds to be reinvested in new originations.
- The sale was driven by a strategic evaluation of the NPV of asset sales versus traditional on-balance sheet asset management strategies.

Core Portfolio Performance and Delinquency:
- The core CRE loan portfolio totaled $6.1 billion, with an 8% reduction due to payoffs and liquidations, and a slight increase in 60-day delinquency to 17 loans.
- Credit migration was muted, as most of the portfolio decline was due to a reduction in portfolio balance.
- The focus remains on stabilizing the portfolio through asset management strategies such as loan modification.

Capital Markets and Funding Enhancements:
- Ready Capital enhanced liquidity by collapsing two CRE CLOs and securing additional warehouse capacity for SBA and USDA lending.
- The actions generated $221 million in liquidity, supporting new loan originations to rebuild net interest margin.
- These moves were aimed at improving financing costs and increasing funding capacity to support loan originations and growth.

Earnings and Financial Outlook:
- Distributable earnings were a loss of $0.14 per share, with net interest income increasing to $17 million.
- The company expects modest earnings growth in the second half of 2025, driven by new originations, portfolio stabilization, and increased lending volumes in SBA and USDA segments.
- The outlook assumes no significant macroeconomic deterioration, with the current dividend level to be maintained until earnings support an increase.