Ready Capital Corporation

Ready Capital reported a GAAP loss from continuing operations of $0.63 per common share versus a $1.25 loss in the first quarter. Distributable earnings were a loss of $0.47 per common share, and a loss of $0.24 per common share excluding realized losses on asset sales, compared with losses of $1.33 in the prior quarters. Book value per share was $6.83 versus $7.43 at March 31, an 8.1% decline. Reoccurring revenue was $15.3 million versus $16.2 million, while interest income was $77.4 million, down by $4.3 million. Operating expenses improved to $48.7 million from $67.7 million. The company ended the quarter with $124.1 million of unrestricted cash, $6.26 billion of total assets, $690 million of unencumbered assets, and total leverage of 3x. For guidance, management said it expects the remaining 2026 liquidity needs to be met through optimization of financing on about $950 million of CRE loans, runoff on about $900 million of CRE loans, and potential sale or financing of a $118 million joint venture position, with no large loan sales currently budgeted. It also reaffirmed a $1.5 billion annual SBA 7(a) origination target and said it expects OpEx reduction of 25% to 35%.

Tom Capasse framed the quarter as evidence that the repositioning plan is working and said the company is in the "eighth inning" of its liquidity plan. He emphasized four priorities: strengthening liquidity, resolving non- and subperforming CRE assets, lowering the cost structure, and growing SBA 7(a) lending. His tone was confident but still conditional, repeatedly noting that more work remains to meet 2026 obligations and return the business to profitability.

Andrew Ahlborn focused on the pace of improvement in reported results and balance-sheet cleanup. He cited the narrower GAAP loss of $0.63 per share, the reduced distributable loss, the decline in book value to $6.83, and the moderation of pressure as loan sales wind down. He also highlighted $124.1 million of unrestricted cash, $690 million of unencumbered assets, 3x leverage, and lower operating expenses of $48.7 million, with servicing expense normalizing to $3.4 million from $15.4 million. He said net interest income should continue improving as nonaccrual loans and REO are resolved and debt is reduced.

Analysts pressed management on how the company will meet fourth-quarter debt maturities without more loan sales, and Capasse said the plan now relies mainly on financing optimization, runoff, and the $118 million JV position, with loan sales no longer budgeted except opportunistically. Questions also focused on the Portland Ritz mixed-use asset and whether the company could monetize it; management said the hotel, condos, and office pieces are all progressing and that a monetization decision could come in coming quarters. Jade Rahmani challenged whether the company can realistically raise enough capital and return to profitability, and Capasse responded that the short-duration legacy book, SBA ramp, and a targeted 25% to 35% OpEx reduction should support profitability.