| Valuation method | Value, $ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 11.32 | 431 |
| Intrinsic value (DCF) | 1.97 | -8 |
| Graham-Dodd Method | n/a | |
| Graham Formula | 30.32 | 1323 |
Ready Capital Corporation (NYSE: RC) is a diversified real estate finance company specializing in small to medium balance commercial (SBC) loans, SBA loans, residential mortgages, and mortgage-backed securities. Operating as a REIT, Ready Capital focuses on high-yield, niche lending segments through its three core business segments: SBC Lending & Acquisitions, Small Business Lending, and Residential Mortgage Banking. The company leverages its subsidiaries—ReadyCap Commercial, ReadyCap Lending, and GMFS—to originate, acquire, and service loans, targeting stabilized or transitional investor properties, SBA 7(a) guaranteed loans, and residential mortgages. Headquartered in New York, Ready Capital benefits from tax-advantaged REIT status, provided it distributes 90% of taxable income to shareholders. Despite macroeconomic headwinds, its diversified lending approach and focus on underserved segments position it strategically in the $1.5T+ U.S. commercial real estate debt market. The company’s hybrid model—combining balance sheet lending with securitization—enhances liquidity and scalability.
Ready Capital offers a high dividend yield (~13.5%) but carries significant risks, including exposure to rising interest rates and credit deterioration in its SBC/SBA portfolios. The company’s 2023 net loss of $435M and negative EPS (-$2.63) reflect margin compression from higher funding costs. However, its $274M operating cash flow and $144M liquidity provide near-term stability. Investors should weigh its attractive yield against its leveraged balance sheet (total debt: $6B) and beta of 1.5, indicating high volatility versus the market. The stock may appeal to income-focused investors tolerant of cyclical risks in commercial real estate.
Ready Capital’s competitive edge lies in its specialization in small-balance commercial loans (typically $1M–$5M) and SBA lending—segments underserved by larger REITs and banks. Its ReadyCap platform’s multi-channel origination (correspondent, broker, direct) diversifies sourcing, while GMFS adds residential mortgage capabilities. However, the company faces stiff competition from larger mortgage REITs with lower funding costs (e.g., Annaly Capital) and niche lenders like Ladder Capital (LADR). Its SBA 7(a) business competes with regional banks and non-bank lenders. Key risks include reliance on securitization markets (impacted by rate volatility) and concentration in transitional CRE assets (higher default risk). Unlike Annaly, which focuses on agency MBS, Ready Capital’s higher-yielding portfolio increases credit risk but supports dividend sustainability if underwriting remains disciplined. Its REIT structure is a double-edged sword: tax benefits offset by dividend payout pressures.