From the start of the fourth quarter to date, we have generated approximately $380 million in free cash from two primary sources: $130 million from bulk portfolio sales and $250 million from portfolio runoff and other asset management resolutions. Overall, our liquidity projections anticipate generating an additional $500 million in free cash flow by year-end from two primary sources. First, we expect to generate $250 million from portfolio runoff consistent with our 36% trailing twelve-month repayment rate ...

Financial Data and Key Metrics Changes - The company reported a GAAP loss from continuing operations of $1.46 per common share for the fourth quarter, with distributable earnings reflecting a loss of $0.43 per common share, and $0.09 per common share when excluding realized losses on asset sales [14] - Book value per share declined 14% to $8.79 from $10.28 in the prior quarter, primarily due to an increase in combined valuation allowance and CECL reserves totaling $173 million [14][15] - The recurring revenue decreased to $41.5 million from $47.3 million in the prior quarter, attributed to a reduction in gain on sale revenue from lower SBA 7(a) and USDA loan sales [15] Business Line Data and Key Metrics Changes - The company is targeting a 25% reduction in operating costs to align with a simplified CRE investment strategy, increasing capital allocation to capital-light small business lending operations from 10% to 20% [9] - The company generated approximately $380 million in free cash from portfolio sales and asset management resolutions, with expectations to generate an additional $500 million by year-end [6][7] - The negative earnings drag from sub and non-performing loans is approximately $0.08 per share, with cash outflows of $13 million per quarter [7] Market Data and Key Metrics Changes - The occupancy rate for the hotel component of the Ritz property increased by 6.5% year-over-year, with ADR rising by 5% to $492 and RevPAR reaching $210 [10] - The company remains a top five lender in the SBA market despite a 50% decline in originations due to last year's government shutdown, with originations in the quarter totaling $84 million [11] Company Strategy and Development Direction - The company is focused on a comprehensive balance sheet repositioning strategy with three key priorities: strengthening liquidity, selling underperforming CRE assets, and positioning for sustainable future growth [4] - The repositioning plan includes aggressive asset management and a streamlined CRE origination business with a lower-cost structure [4][5] - The company is committed to enhancing liquidity and strengthening its platform while increasing reliance on external managers to expand investment capacity [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in executing the liquidity plan and achieving stabilization in key assets, particularly the Ritz property [20] - The company anticipates continued pressure on book value but expects a more attractive portfolio with a competitive earnings profile post-repositioning [8] - Management highlighted the importance of strategic asset management decisions to not extend loans, focusing instead on short-term resolutions [22] Other Important Information - The company has successfully retired its 5.75% February senior unsecured note upon maturity [8] - The Ritz property represents 16% of year-end stockholders' equity, with significant progress made in its stabilization plan [9][10] Q&A Session Summary Question: Thoughts on keeping the Portland asset and accelerating the time frame - Management indicated strong progress in the stabilization plan and would likely lean towards holding the asset until stabilization is achieved [19][20] Question: Increase in nonaccruals and underlying performance - Management clarified that the increase in nonaccruals is due to strategic decisions rather than negative credit migration, focusing on short-term resolutions [22][23] Question: Anticipation of needing to reverse previously accrued interest - Management confirmed that accrued interest for loans identified for sale was reversed in the fourth quarter, with a reduction of approximately $53 million [28] Question: Sales price of loans sold in February relative to par - Loans sold in February were priced in the high nineties, with carrying and UPB values being closely aligned [40] Question: Other monetization strategies being considered - Management acknowledged the potential for selling non-core assets but emphasized commitment to the SBA business as a high ROE segment [48][49]

Ready Capital (NYSE:RC) Q4 2025 Earnings call February 27, 2026 08:30 AM ET Speaker7Greetings, and welcome to the Ready Capital Fourth Quarter 2025 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. It is now my pleasure to introduce your host, Andrew Ahlborn. Thank you. You may begin.Speaker0Thank you, operator, and good morn ...