Ready Capital Corporation

Greetings and welcome to the ReadyCapRu 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 Albarn. Thank you. You may begin.

Thank you, operator, and good morning to those of you on the call. Some of our comments today will be forward-looking statements within the meaning of the federal securities laws. Such statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect. Therefore, you should exercise caution in interpreting and relying on them. We refer you to our SEC filings for a more detailed discussion of the risk that could impact our future operating results and financial condition. During the call, we will discuss our non-GAAP measures, which we believe can be useful in evaluating the company's operating performance. These measures should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP. A reconciliation of these measures to the most directly comparable GAAP measure is available on our fourth quarter 2025 earnings release and our supplemental information, which can be found in the investor's section of the Ready Capital website. I will now turn it over to Chief Executive Officer Tom Capaci.

Thank you, Andrew. Good morning, everyone, and thank you for joining today's call. To begin, we have made significant progress advancing the comprehensive balance sheet repositioning strategy outlined in the third quarter. This disciplined plan remains focused on three key priorities. One, strengthening liquidity to generate free cash flow in excess of our 2026 debt maturities. Two, selling underperforming CRE assets to eliminate negative earnings drag. And three, positioning ready capital for sustainable future growth. The first phase of our repositioning strategy is focused on aggressive asset management, while the second will streamline the CRE origination business into a lower-cost structure with greater reliance on our external manager waterfalls, deep CRE investment capacity and expertise. To that end, to support and lead these efforts, we have promoted Dominic Scali to Chief Credit Officer and co-president of our CRE operating business, ReadyCap Commercial. With over 24 years of CRE lending experience, including 10 years with Ready Capital, Dominic has significantly contributed to building our lending infrastructure. In his new role, he will oversee all aspects of our CRE strategy. Dom is joining us on today's call. Gary Taylor will transition to focus on our SBA business as president of ReadyCap Lending from his position as chief operating officer. Given Gary's over 30 years of experience leading non-bank SBA lenders, This change aligns well with our increasing emphasis on capital-like business lines going forward. I also want to express my gratitude to Adam Zausmer for his decade-long contributions to Ready Capital and the instrumental roles he has played over the years. These organizational changes support the execution of our repositioning plan and seize new opportunities as we progress. Now turning to the business update. We are making significant progress executing our liquidity plan to both address our corporate maturities and reposition the CRE portfolio. Our plan targets generating over $850 million of free cash and reduces the legacy CRE book 60% to approximately $2 billion, thereby optimizing the balance sheet to support future earnings growth. 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 both 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 the portfolio runoff consistent with our 36% trailing 12-month repayment rate. Second, we expect to generate approximately $250 million in free cash from planned $1.5 billion of additional loan sales with a focus on NPL and sub-yielding assets. Loan sales are expected to be substantially complete by the end of the second quarter. Within this gross reduction of our legacy CRE book, our portfolio repositioning includes an aggressive asset management focus on the sale or resolution of approximately $1.4 billion of sub- and non-performing loans and REO assets. The current quarterly negative earnings drag of this subset is approximately $0.08 per share with cash outflows of $13 million per quarter. Continued execution of the liquidity plan may result in additional book value pressure depending on the specific actions we take to increase cash and reduce debt. In the fourth quarter, the company's book value declined 14% per share. The anticipated benefit is a more attractive portfolio with competitive earnings profile and a 1.0 times reduction in leverage to 2.5x, which would allow us to allocate more cash flow towards growth. Our immediate debt maturities include $67 million due in the third quarter and $450 million due in the fourth quarter. While we are discussing the refinance of a portion of these maturities into a new debt offering, we are executing a liquidity plan that ensures free cash significantly exceeding these obligations. We successfully retired our 5.75% February senior unsecured note upon maturity. Our plan also includes a targeted 25% reduction in operating costs to align with the business's more simplified CRE investment strategy and increased capital allocation to our capital light small business lending operations from 10% to 20%. I would also like to provide an update on two additional items. First, the Ritz property remains our largest single equity allocation, representing 16% of year-end stockholders' equity. Since assuming control of the property in August, we have made meaningful progress in our stabilization plan. First, the condominiums, which represent 40% of the total project value. Along with the new sales agent, Christie's, we have adopted a phased sales strategy to sell the smaller units first at lower prices and the larger units later at higher prices. This is designed to facilitate momentum and achieve a full sellout at target per square foot levels. We successfully launched phase one in December, placing 16 units under contract with an additional nine units executing reservation agreements and deposits, which would result in 27% sellout of the 131 total units. The average pricing of the new sales was $737 per square foot. Second, the hotel, which represents 50% of the total project value. We have adopted a strategy led by our property manager, Lincoln, that focuses on achieving higher occupancy given the more competitive market rates in the improving Portland area. As a result, year-over-year occupancy increased by 6.5%, ADR rose by 5% to $492, and REVPAR reached $210. Third, the combined office and retail spaces, which represent 10% of the total project value. We continue to maintain 28% occupancy, but prospective tenant tours have substantially increased since our relaunch. Separately, the impact of last year's government shutdown was estimated to have curtailed $5.3 billion of industry-wide SBA 7A originations, resulting in a 50% decline in our originations in the quarter to $84 million, a level significantly below 2026 volume targets. Importantly, we remain a top five lender in the SBA market. We anticipate coming to market with our fourth SBA securitization during the second quarter, highlighting the growth of this key segment in 2026. In terms of our repositioning plan, greater capital allocation to this high ROE segment provides another foundation for future earnings growth. We continue to take deliberate steps to enhance liquidity and strengthen the platform. As of today, we generated approximately 35% of our target liquidity objective and continue to make steady progress. At the same time, we are refining our CRE business and increasing our reliance on Waterfall to expand investment capacity and reducing related operating costs. There is more work ahead, but we are encouraged by the progress made today and remain focused on disciplined execution. With that said, I'll now turn it over to Andrew for a detailed review of the quarterly results.