Ready Capital: Distress And Opportunity, Why I Bought The Series E Preferreds

2025-05-26 04:11:27 ET

Summary

• I've been accumulating RC's 6.50% Series E Preferreds, amid a significant year-to-date selloff. They're trading for 62 cents on the dollar and offer a 10.5% dividend yield.
• RC common shares are down 40% year-to-date, while the E preferreds have dipped 16%.
• I think the selloff is overdone and the preferreds provide a compelling risk-to-reward profile at their current level.

I've been buying Ready Capital's ( RC ) 6.50% Series E Cumulative Preferreds ( RC.PR.E ) on the back of the mREIT's sustained year-to-date selloff. The commons are down 40% with the E preferreds dipping 16% over the same time period. There's a lot to dislike. Most notably, the mREIT has cut its dividend five times since 2022, dampening confidence of its investor base in management as continued multifamily distress, spiking long-term Treasury rates, and rising downstream inflation expectations aggregate to form one of the worst macro environments for REITs since the 2008 Great Recession. RC's securities are trading at near-distress levels with the Series E now swapping hands for $15.43 per share, a roughly 38% discount to their $25 per share liquidation, or for 62 cents on the dollar. The security also pays a $1.625 per share annual coupon for a 10.5% yield on cost....

Read the full article on Seeking Alpha

For further details see: