Ready Capital (RC) Q4 2024 earnings summary

Executive summary

• Q4 2024 ended with a GAAP loss per share of $(1.80) and a full-year loss of $(2.52), driven by aggressive reserving on problem loans and a dividend reduction to reset the balance sheet.

• Distributable earnings before realized losses were $0.23 per share for Q4, with a loss of $(0.03) per share after realized losses.

• Book value per share declined to $10.61 at year-end, reflecting increased reserves, share repurchases, and realized/unrealized losses.

• CRE portfolio was bifurcated into core and non-core assets to enhance transparency and focus on liquidation and reinvestment strategies.

• Completed acquisitions of Madison One and Funding Circle USA, and entered a merger agreement to acquire United Development Funding IV.

Financial highlights

• Q4 GAAP loss per share was $1.90; distributable earnings showed a loss of $0.03 per share, with $0.23 per share before realized losses and a 7.1% distributable ROE.

• Book value per share declined 14% to $10.61, mainly due to increased reserves and dividend shortfall.

• Q4 2024 total loan originations were $784.3 million; repayments and sales were $1.1 billion.

• Operating costs rose to $57.9 million, up from $53.1 million sequentially, driven by legal and servicing expenses.

• Q4 net interest income was $50.1 million, with a $285 million provision for loan losses.

Outlook and guidance

• Expectation to originate $1–1.5 billion in new CRE loans in 2025, with improved credit fundamentals.

• Recovery to a 10% stabilized core return targeted by end of 2025, with full benefit from non-core liquidation realized in 2026.

• Dividend set at $0.125 per share for Q1 2025, with plans to grow as earnings improve.

• UDF4 merger expected to close in the first half of 2025, adding $0.17 per share annual earnings.

• Asset management strategy for Portland mixed-use asset targets sequential exits over 2–3 years.