Ready Capital Corporation (NYSE: NYSE:RC), a real estate investment trust with a market capitalization of $1.26 billion, has entered into a definitive agreement resulting in the creation of a direct financial obligation. According to InvestingPro data, the company maintains a strong 13.4% dividend yield and has consistently paid dividends for nine consecutive years, despite currently showing some financial strain.
On Monday, the company completed the sale of $130 million aggregate principal amount of its 9.00% Senior Notes due 2029. This includes $15 million from the exercise of the underwriters' over-allotment option.
The sale of the notes, which was finalized today, generated net proceeds of approximately $125.4 million, after deducting underwriting discounts, commissions, and estimated offering expenses.
These funds are intended for the origination or acquisition of target assets, general corporate purposes, and to potentially reduce borrowings under existing loan repurchase agreements or credit facilities.
With a current ratio of 8.45, InvestingPro analysis shows the company's liquid assets comfortably exceed its short-term obligations, though its overall financial health score remains weak. In the interim, the proceeds may be placed in interest-bearing, short-term investments.
The notes, which are set to mature on December 15, 2029, will pay interest quarterly at a rate of 9.00% per annum. They are senior unsecured obligations of Ready Capital and rank equally with any future unsecured and unsubordinated indebtedness. However, they are effectively junior to any secured indebtedness and structurally junior to liabilities and preferred stock of the company's subsidiaries.
Ready Capital has the option to redeem the notes on or after December 15, 2026, at a redemption price of 100% of the principal amount, plus accrued interest. In the event of a change of control repurchase event, note holders may require the company to repurchase the notes at a price equal to 101% of the principal amount, plus accrued interest.
The notes have been approved for listing on the New York Stock Exchange under the symbol "RCD" with trading expected to commence within 30 days. This financial move is based on a press release statement and further details can be found in the accompanying exhibits of the SEC filing. For deeper insights into Ready Capital's financial health and growth prospects, including additional ProTips and comprehensive valuation analysis, investors can access the full Pro Research Report available on InvestingPro.
In other recent news, Ready Capital Corporation announced the pricing of a public offering of $115 million in 9.00% Senior Notes due 2029. The net proceeds from the offering will be used to originate or acquire assets in line with the company's investment strategy. The company also plans to list these notes on the New York Stock Exchange under the symbol "RCD," with trading anticipated to start within 30 days after the offering closes. Morgan Stanley (NYSE:MS) & Co. LLC, Piper Sandler & Co., RBC (TSX:RY) Capital Markets, LLC, UBS Investment Bank, and Wells Fargo (NYSE:WFC) Securities, LLC are serving as book-running managers for the offering.
In their recent financial results for the third quarter of 2024, Ready Capital reported a GAAP loss of $0.07 per share and an adjusted distributable earnings gain of $0.25 per share. Despite a 6% decline in originated loans, the company's commercial real estate portfolio stands at $8.1 billion, and it achieved record small business lending originations of $440 million.
Furthermore, Ready Capital is progressing in its exit from residential mortgage banking, expected to generate $40 million from remaining mortgage servicing rights. The company maintains a strong liquidity position with $181 million in unrestricted cash and is in discussions with banks for refinancing a $120 million debt maturity due next year.
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