Steep Decline in RC Stock Price Following Q4 2024 Earnings Release Has Potential to Erase More Than $30 Million in Value for UDF IV Shareholders Under Proposed Merger NexPoint Urges Board to Reconsider Hasty Rejection of NexPoint's Proposal and Postpone Special Meeting to Properly Evaluate Transactions on Behalf of Shareholders DALLAS, March 3, 2025 /PRNewswire/ -- NexPoint Real Estate Opportunities, LLC (together with its affiliates "NexPoint") today provided an update on United Development Funding IV ("UD ...

Investment and Market Risks - The company anticipates a significant portion of its investments will be in lower-to-middle-market (LMM) loans, which are subject to credit risks[11]. - Interest rate fluctuations may adversely affect the company's net income and the value of its assets and common stock[12]. - The company is exposed to liquidity risk, which includes the inability to fund acquisition and origination activities at settlement dates[529]. - The company faces credit risk related to investments in LMM loans, particularly those made to self-employed borrowers[12]. - The company is subject to various market risks, including adverse changes in interest rates and market values of financial instruments[521]. - The estimated fair value of fixed-rate investments is expected to decrease in a rising interest rate environment, affecting the company's economic exposure[533]. - The company is exposed to counterparty risk if lenders default on obligations related to repurchase agreements, with collateral typically exceeding borrowings[534]. - Interest rate swaps are utilized to mitigate risks associated with changing interest rates, involving variable-rate interest payments in exchange for fixed-rate payments[535]. - The company has entered into over-the-counter interest rate swap agreements, exposing it to counterparty performance risk if the counterparty defaults[536]. Financial Performance - Total assets decreased from $12,441,217 thousand as of December 31, 2023, to $10,141,921 thousand as of December 31, 2024, representing a decline of approximately 18.5%[564]. - Net interest income before provision for loan losses fell from $229,346 thousand in 2023 to $200,520 thousand in 2024, a decrease of about 12.6%[565]. - Provision for loan losses significantly increased to $292,759 thousand in 2024 from $7,230 thousand in 2023, indicating a substantial rise in expected credit losses[565]. - Net income (loss) attributable to Ready Capital Corporation was $(443,751) thousand in 2024, compared to $331,454 thousand in 2023, marking a shift from profit to loss[565]. - Total non-interest income (expense) turned negative at $(101,765) thousand in 2024, down from a positive $408,468 thousand in 2023[565]. - The company reported a comprehensive loss of $(436,327) thousand in 2024, compared to a comprehensive income of $330,943 thousand in 2023[567]. - Earnings per common share from continuing operations (basic) dropped to $(2.52) in 2024 from $2.27 in 2023, reflecting a significant decline in profitability[565]. - The company declared dividends of $1.10 per share of common stock in 2024, down from $1.46 in 2023[565]. Acquisitions and Mergers - The company completed the acquisition of Funding Circle USA, Inc. for approximately $41.2 million in cash, enhancing its small business loan offerings[577]. - Ready Capital entered into a merger agreement with United Development Funding IV, expected to close in the first half of 2025, which will increase its equity capital base to over $2.2 billion[576]. - The company acquired Madison One for an initial purchase price of approximately $32.9 million, focusing on USDA and SBA guaranteed loan products[579]. - The Broadmark Merger expanded the Company's residential and commercial construction lending platforms, diversifying its business[585]. - The Broadmark Merger completed on May 31, 2023, had a total consideration of $637,229,000, with net assets acquired valued at $826,895,000 and a bargain purchase gain of $189,666,000[695][698]. Loan Portfolio and Credit Quality - Total loans, net decreased from $10,713,084 thousand in December 2023 to $8,549,836 thousand in December 2024, representing a decline of approximately 20.2%[701]. - The percentage of loans outstanding that are current increased to 93.7% in December 2024 from 89.8% in December 2023, reflecting an improvement in loan performance[707]. - Delinquency rates for loans 30-59 days past due were 1.6% in December 2024, consistent with the previous year, while loans 60+ days past due increased to 4.7%[707]. - The company continues to monitor credit quality indicators, with a focus on delinquency rates and loan-to-value ratios to assess borrower capacity and willingness to meet financial obligations[702]. Regulatory and Operational Constraints - The company must maintain its qualification as a real estate investment trust (REIT), which imposes operational limits[12]. - The company is required to distribute a significant portion of taxable income annually, constraining its ability to accumulate operating cash flow[541]. - The company maintains its REIT status by distributing at least 90% of its taxable income to shareholders[586]. Risk Management and Internal Controls - The company maintained effective internal control over financial reporting as of December 31, 2024, according to the audit opinion[556]. - The company utilizes loan loss forecasting models, including a probability of default method and a probability-weighted expected cash flow method, to estimate expected lifetime credit losses[599]. - The company utilizes derivative financial instruments, such as interest rate swaps and FX forwards, as part of its risk management strategy[614].

Group 1 - The Conservative Income Portfolio targets high-value stocks with significant margins of safety and aims to reduce volatility through well-priced options [1] - Ready Capital Corporation (NYSE: RC) is identified as a potential value trap, trading at a substantial discount to tangible book value within the mortgage REIT sector [2] - Trapping Value, with over 40 years of combined experience, focuses on generating options income while emphasizing capital preservation [3] Group 2 - The Covered Calls Portfolio is designed for lower volatility income investing with a focus on capital preservation [2] - The Enhanced Equity Income Solutions Portfolio aims to generate yields of 7-9% while minimizing volatility [1] - The fixed income portfolio targets securities with high income potential and significant undervaluation compared to peers [2]

Financial Data and Key Metrics Changes - The fourth quarter GAAP losses per common share were $1.90, while distributable earnings showed a loss of $0.03. Excluding realized losses on asset sales, distributable earnings were $0.23 per common share, representing a 7.1% return on average stockholders' equity [32] - Book value per share decreased to $10.61 from $12.59 in the prior quarter, primarily due to an increase in combined CECL and valuation allowances and a shortfall on dividend coverage from earnings [40] - The combined provision for loan loss and valuation allowance increased by $253.8 million, with an additional $242.7 million in CECL reserves primarily due to non-core assets [38] Business Line Data and Key Metrics Changes - The small business lending segment experienced significant growth, with fourth quarter originations of $350 million, capping a record year of $1.2 billion, including $1.1 billion of SBA loans [21][22] - The core portfolio contracted by $1.3 billion, with new production limited to $485 million, resulting in an 840 basis points contribution to distributable ROE before realized losses [15] Market Data and Key Metrics Changes - The CRE loan portfolio totaled $7.2 billion, split into 83% core and 17% non-core assets, with a contractual yield of 8% and a 93% pay rate [13] - 60-day plus delinquencies in the core portfolio were only 2%, with an average risk rating of 2.2% [14] Company Strategy and Development Direction - The company has implemented aggressive actions to reset the balance sheet, including a $284 million combined CECL and valuation allowances, marking 100% of non-performing loans to current values [9] - The strategy involves bifurcating the CRE portfolio into core and non-core assets to enhance transparency and track asset management strategies [12] - The company expects to originate between $1 billion and $1.5 billion of new production in lower middle market CRE loans in 2025 [15] Management's Comments on Operating Environment and Future Outlook - Management indicated that the fourth quarter concluded a year of mixed results, with expectations for recovery in net interest margins and ROE in 2025 [8][29] - The company anticipates that the recovery to a 10% stabilized core return will be supported by the liquidation of the non-core portfolio and growth in the small business lending segment [23][28] Other Important Information - The company has a $150 million share repurchase program to enhance shareholder returns [11] - Liquidity remains strong with $185 million of unrestricted cash, expected to improve with upcoming liquidity events [41] Q&A Session Summary Question: Will cash earnings cover the new dividend level? - Management expects to cover the dividend approximately 1.5 times over the course of the year, with earnings ramping up as the year progresses [46] Question: What is the rationale behind the UDF acquisition? - The acquisition is viewed as highly accretive on an EPS basis, with confidence in the credit profile of the acquired assets [78] Question: How does the company plan to address upcoming maturities? - The company plans to use projected cash flow and liquidity to address maturities, with a preference to access markets for larger debt issuances [73] Question: What are the credit trends in the SBA business? - The company has seen strong credit trends, with 60-plus delinquencies at a moderate level of 2.8% [89]

Financial Data and Key Metrics Changes - The fourth quarter GAAP losses per common share were $1.90, while distributable earnings showed a loss of $0.03. Excluding realized losses on asset sales, distributable earnings were $0.23 per common share, representing a 7.1% return on average stockholders' equity [32] - Book value per share decreased to $10.61 from $12.59 in the previous quarter, primarily due to an increase in combined CECL and valuation allowance [40] Business Line Data and Key Metrics Changes - The core portfolio contracted by $1.3 billion, with new production limited to $485 million, resulting in an 840 basis points contribution to distributable ROE before realized losses [15] - Small business lending operations experienced significant origination growth of 1.7%, with fourth quarter originations of $350 million, capping a record year of $1.2 billion [22] Market Data and Key Metrics Changes - The CRE loan portfolio totaled $7.2 billion, split into 83% core and 17% non-core assets. The core portfolio has a contractual yield of 8% with a 93% pay rate [13] - 60-day plus delinquencies in the core portfolio were only 2%, with an average risk rating of 2.2% [14] Company Strategy and Development Direction - The company has undertaken aggressive actions to reset the balance sheet, including a $284 million combined CECL and valuation allowances, marking 100% of non-performing loans to current values [9] - The strategy involves bifurcating the CRE portfolio into core and non-core assets to enhance transparency and track asset management strategies [12] Management's Comments on Operating Environment and Future Outlook - Management expects recovery in net interest margin and ROE over the succeeding year, with a focus on aggressive liquidation of the non-core portfolio [10][29] - The company anticipates originating between $1 billion and $1.5 billion of new production in lower middle market CRE loans in 2025 [15] Other Important Information - The company has a strong liquidity position with $185 million of unrestricted cash and has raised $350 million of corporate financing across two transactions [41] - The company plans to execute a $150 million share repurchase program to enhance shareholder returns [11] Q&A Session Summary Question: Will cash earnings cover the new dividend level? - Management expects to cover the dividend approximately 1.5 times over the course of the year, with earnings ramping up as the year progresses [46] Question: What is the rationale behind the UDF acquisition? - The acquisition is viewed as highly accretive on an EPS basis, with a strong historical performance of the loans involved [78] Question: How does the company plan to address 2026 maturities? - The company plans to access markets for refinancing and has already started addressing some maturities with recent senior secured notes [72] Question: What are the credit trends in the SBA business? - The company has seen strong credit trends in its SBA portfolio, with 60-plus delinquencies remaining at a moderate level of 2.8% [89]

For the quarter ended December 2024, Ready Capital (RC) reported revenue of $50.05 million, down 4.7% over the same period last year. EPS came in at $0.23, compared to $0.26 in the year-ago quarter.The reported revenue represents a surprise of -9.72% over the Zacks Consensus Estimate of $55.44 million. With the consensus EPS estimate being $0.21, the EPS surprise was +9.52%.While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations to determine ...

Ready Capital (RC) came out with quarterly earnings of $0.23 per share, beating the Zacks Consensus Estimate of $0.21 per share. This compares to earnings of $0.26 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 9.52%. A quarter ago, it was expected that this real estate investment trust would post earnings of $0.23 per share when it actually produced earnings of $0.25, delivering a surprise of 8.70%.Over the last four quarter ...

Core Insights - Ready Capital Corporation reported a GAAP loss per common share from continuing operations of $(1.80) for the quarter ended December 31, 2024, and a distributable loss per common share of $(0.03) [1][26] - The company declared a quarterly cash dividend of $0.125 per share for the quarter ending March 31, 2025, to align with anticipated cash earnings and preserve capital for reinvestment [1][12] - The company experienced mixed results in 2024, with strong performance in the Small Business Lending segment but challenges in the multi-family lending sector due to higher rates and inflation [2][6] Financial Performance - For the fourth quarter, the company reported LMM commercial real estate originations of $436 million and Small Business Lending loan originations of $348 million, including $315 million of SBA 7(a) loans [6] - The total originations for the year amounted to $2.4 billion, with $1.1 billion from SBA 7(a) loans [6] - The book value per share was reported at $10.61 as of December 31, 2024 [6] Strategic Actions - The company has taken decisive actions to stabilize its balance sheet by fully reserving for all non-performing loans in its commercial real estate portfolio, which is expected to improve net interest margins over time [2] - A new stock repurchase program was approved, authorizing the repurchase of up to $150 million of the company's common stock [5] - The company entered into a definitive merger agreement to acquire United Development Funding IV, enhancing its capital solutions for residential real estate developers [6] Dividend Information - The quarterly cash dividend of $0.125 per share is payable on April 30, 2025, to shareholders of record as of March 31, 2025 [12] - Additional dividends were declared for the Series C and Series E Preferred Stocks, payable on April 15 and April 30, 2025, respectively [12] Subsequent Events - On February 21, 2025, the company closed a private placement of $220 million in Senior Secured Notes due 2028, intended for debt repayment and general corporate purposes [7]

Exhibit 99.1 READY CAPITAL CORPORATION REPORTS FOURTH QUARTER 2024 RESULTS AND DECLARES FIRST QUARTER 2025 DIVIDENDS - GAAP LOSS PER COMMON SHARE FROM CONTINUING OPERATIONS OF $(1.80) - - DISTRIBUTABLE LOSS PER COMMON SHARE OF $(0.03) - - DISTRIBUTABLE EARNINGS PER COMMON SHARE BEFORE REALIZED LOSSES OF $0.23 - - DISTRIBUTABLE RETURN ON AVERAGE STOCKHOLDERS' EQUITY BEFORE REALIZED LOSSES OF 7.1% - - DECLARED A QUARTERLY CASH DIVIDEND OF $0.125 PER SHARE OF COMMON STOCK AND OPERATING PARTNERSHIP UNIT FOR THE ...

Core Viewpoint - NexPoint Advisors has submitted a competing proposal to UDF IV's Board ahead of the Special Meeting scheduled for March 4, 2025, to vote on the merger with Ready Capital, urging the Board to postpone the meeting for a month to evaluate their proposal [1][3]. Proposal Details - NexPoint's proposal offers superior economic terms compared to the Ready Merger, including enhanced balance sheet distributions and full entitlement to Contingent Value Rights (CVR) loan proceeds [2]. - The proposal includes a higher pre-closing dividend for shareholders and 100% recovery of net principal and interest on CVR loans, contrasting with the Ready Merger's terms which allow Ready Capital to recover $13.3 million net before shareholders receive 60% of additional recoveries [2]. - NexPoint plans to cease indemnification payments for the imprisoned management team and recover improperly advanced legal fees, distributing 100% of net recoveries to shareholders [2]. Governance and Engagement - NexPoint criticizes UDF IV's Board for a lack of engagement and urges them to consider their proposal in line with fiduciary duties, highlighting governance failures at UDF IV [3]. - Shareholders are encouraged to refrain from voting until the Board has fully assessed NexPoint's proposal and engaged in discussions [3]. Additional Information - NexPoint has established a website for shareholders to receive updates regarding UDF IV, the Ready Merger, and competing proposals [4].