Ready Capital Corporation Announces Agreement to Acquire United Development Funding IV(

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On December 2, 2024, Ready Capital Corporation (“Ready Capital”) revealed its intention to acquire United Development Funding IV, a Maryland real estate investment trust, through a Merger Agreement dated November 29, 2024. This acquisition will involve UDF IV merging with a wholly owned subsidiary of Ready Capital.

Ready Capital released a press statement on December 2, 2024, alongside an investor presentation regarding the merger. The Merger Agreement entails that UDF IV shareholders will receive both an upfront stock consideration and contingent value rights (CVR), allowing them the potential to receive additional benefits over a specified period from select loans’ cash proceeds.

The transaction, still subject to UDF IV shareholders’ approval, is projected to finalize in the first half of 2025. Post-merger, Ready Capital’s external manager, Waterfall Asset Management, LLC, will continue managing the amalgamated company. Noteworthy is a commitment by UDF IV to provide up to $75 million in cash distributions to its shareholders before the closing, expected to be around $2.44 per share.

This venture is anticipated to offer ample benefits. UDF IV shareholders will have the opportunity to own a share of Ready Capital, a NYSE-listed stock with promising daily trade volumes and a current dividend yield of 13.6%. Moreover, the CVRs included in this agreement entitle UDF IV shareholders to 60% of excess cash proceeds from selected loans between closing and December 31, 2028.

The acquisition is aligned with Ready Capital’s strategic moves, fostering a diversified business model, expanding its residential construction lending portfolio, and benefiting from a strong relationship built over ten years with UDF IV and its affiliates. The deal not only aims for financial gains but also strategic expansion and enhanced market position for Ready Capital post-acquisition. Readers are encouraged to delve into the official filings for comprehensive details on this significant development in the financial market.

This article was generated by an automated content engine and was reviewed by a human editor prior to publication. For additional information, read Ready Capital’s 8K filing here.

Ready Capital Company Profile

Ready Capital Corporation operates as a real estate finance company in the United States. It operates through two segments: LMM Commercial Real Estate and Small Business Lending. The company originates, acquires, finances, and services lower-to-middle-market (LLM) commercial real estate loans, small business administration (SBA) loans, residential mortgage loans, construction loans, and mortgage-backed securities collateralized primarily by LLM loans, or other real estate-related investments.