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Greetings, and welcome to the Ready Capital Corporation 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 0 on your telephone keypad. It is now my pleasure to introduce your host, Andrew Ahlborn. 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 risks 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 Investors section of the Ready Capital Corporation website. I will now turn it over to Chief Executive Officer, Thomas Capasse.

Thank you, Andrew. Good morning, everyone, and thank you for joining today’s call. To begin, we have made significant progress advancing a 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 Corporation 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 Waterfall’s deep CRE investment capacity and expertise. To that end, to support and lead these efforts, we have promoted Dominic Scally 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 Corporation, 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 nonbank SBA lenders, this change aligns well with our increasing emphasis on capital-light business lines going forward. I also want to express my gratitude to Adam

Thanks, Tom. The fourth quarter earnings and balance sheet are reflective of the repositioning strategy outlined by Tom. For the fourth quarter, we reported a GAAP loss from continuing operations of $1.46 per common share. Distributable earnings were a loss of $0.43 per common share and $0.09 per common share excluding realized losses on asset sales. As Tom discussed, book value ended the year at $8.79 per share versus $10.28 per share in the prior quarter. This change was primarily due to an increase in the combined valuation allowance and CECL reserves of $173 million. The $23 million of valuation allowances relates to $600 million of loans that were transferred to held for sale in the fourth quarter and subsequently sold in 2026. The $150 million increase in CECL reserves relates to more aggressive reserves on nonperforming loans given the shortened resolution timelines. We also anticipate incurring increased valuation allowances as additional loans are identified for sale. In the net loss from normal operations, the following items were impactful. First, recurring revenue was $41.5 million compared to $47.3 million in the prior quarter. The change was primarily due to a $7.7 million reduction in gain-on-sale revenue from lower SBA 7(a) and USDA loan sales due to the government shutdown. This reduction was partially offset by a $2.5 million increase in net interest income as we reduced the negative carry on nonperforming loans. Second, operating expenses increased $7.4 million quarter-over-quarter to $59.9 million. This change was primarily due to increased compensation expense, higher legal fees, and a reduction in the tax benefit. Other items of significance included realized losses of $29 million on asset sales, $15 million of REO charge-offs, and $9.1 million of unrealized losses. Regarding the portfolio, we significantly increased the population of loans placed on nonaccrual, which totaled 27% at year-end. Given portfolio repositioning efforts, we have limited interest accruals to both loans we anticipate holding through maturity and to the cash yield on nonperforming loans or loans that are potentially sale candidates. We currently have a little under $200 million of free cash, which positions us well to address our near-term obligations along with the items previously discussed by Tom. With that, we will open the line for questions. Thank you.

We will now be conducting a question-and-answer session. If you would like to ask a question, please press 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press 2 to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. One moment, please, while we poll for questions. Our first question comes from the line of Doug Harter with UBS. Please proceed with your question.

Thanks. In light of your comments around looking to kind of reposition the portfolio and accelerate dispositions, can you talk about the thoughts around keeping the Portland asset or whether that makes sense to kind of accelerate the timeframe on that?

Yeah. Good question, Gordon. So as you could see in the quarter, there has been a very dramatic change in the trajectories on both the RevPAR given the change in the occupancy strategy by lowering the ADR. Secondly, the condominiums by putting professional managers with specialization in both. So we are ahead of schedule right now in terms of our stabilization plan. So the short answer is we are making very strong progress. And would we hold to the last mile of that stabilization plan versus an accelerated sale, the answer is yes. We probably would lean in that direction. However, we are very confident of our ability to meet the stabilization plan on the two primary components that are 90% of the value, the condos and the hotel, and we also note an overall improvement in the kind of a Phoenix factor in the Portland market more broadly. So, yeah, so we would, that being said, post-stabilization and with the appropriate pricing in relation to that, we would look for an early disposition.

Great. Appreciate that. And then just on the increase on the nonaccruals, just to flush that out, was there a change in the underlying performance or just a change in the strategy of how long you expect to hold those assets?

Yeah. No. It is actually 100% the latter. And on that point, it is a good question. So just to be very clear, what we are undertaking is a focus on short-term resolutions through both asset sales and what we call strategic management, and that will reduce the portfolio by 60% to $2 billion. So that actually renders our previous characterization of core, noncore as less relevant as well as the typical 60-day metrics. And a good example of that in the strategic asset management is we have, for example, a large loan with a sponsor who we might have otherwise extended, and we decide not to extend, and then work with the sponsor to execute a sale of all or a portion of the portfolio. So that is very critical to understand. It is not necessarily negative credit migration. It is really related to the asset sale and asset management strategy itself.

Appreciate the clarifications. Thank you.

As a reminder, if anyone has any questions, you may press 1 on your telephone keypad to join the queue. Our next question comes from the line of Jade Rahmani with KBW. Please proceed with your question.

Thank you very much. On the core CRE and noncore CRE loan portfolios, the percentage of nonaccruals, as you just said, increased sharply. Do you anticipate needing to reverse previously accrued interest on these loans as a result? If not, why not? And can you just comment on the underlying credit trends in both portfolios?

Yeah. Again, I will, and Andrew, you could touch on the accrual question. But, Jade, to be very clear, we are making strategic asset management decisions to not extend where we believe we are putting the borrower in a position where we are not extending the loan, and we are putting the borrower in a good place to be able to execute an alternative strategy, which is usually a portfolio sale. And so to put more granularity on, and so therefore, it is not negative credit migration. It is a conscious decision by us as the lender to not execute modification and extension strategies. So maybe what we could do is, Andrew, if you could answer the question regarding the accrual. And then, Dom, maybe just give Jade an example or two of what we are looking at with respect to what we are deeming our strategic AM strategies.

Yeah. Good morning, Jade. So for loans that were identified for sale in the fourth quarter and settled in the first quarter or loans that we anticipate selling, we have taken the reversals of the accrued interest in the fourth quarter numbers. So you saw roughly a $53 million reduction in accrued interest. So the accrued interest that is sitting on the balance sheet as of year-end is roughly $42 million and really just related to loans we anticipate holding through maturity with full collectibility on that interest.

But, Andrew, it does sound like you are stepping up the pace of loan resolutions, and you did say that you expect to increase valuation allowances on loan sales in the future. So would that not entail writing down that accrued interest balance as well?

Yeah. So the accrued interest associated with loans that may be subject to a market discount if we move them to sale, the accrued interest attached to any of those loans was written down in the fourth quarter.

Okay.

So, mostly, Jade, that was helpful in terms of the accrual question. And, Dom, maybe just give a more granular example of what our asset management strategy is with respect to some of these larger loans.

Yeah. Sure. Hey. Good morning, Jade. So as Tom mentioned, and consistent with our AM strategy and liquidity strategy, we are purposely not entertaining longer-term modifications with some of our assets. A concentration in the increase in nonaccrual is in four or five larger loan exposures where sponsors, good quality asset, good performance, but we are unwilling to provide additional time. And what sponsors have pivoted to do is seek alternative financing or potentially sell assets. So a good example of that, we have a five-property portfolio in the Sunbelt region with an institutional sponsor. Obviously, they would have preferred to have additional time and maybe some spread forbearance to get to the next 12 to 18 months. In lieu of that, they have started marketing that portfolio with a national brokerage firm, and we are confident that we should be able to get repaid in the next quarter or so at or close to par. So just putting some pressure on borrowers on some of these assets where they will pivot ultimately to either seeking alternative financing or potentially selling the underlying assets.

Okay. Thank you. Just on the Portland asset, the 25 reservation agreements, what percent will convert to contracts and what is the average price?

So of the 25, 16 are in contract with hard deposits. The remaining 9 should be converted to contracts with hard deposits within the next few weeks. We have closings in process this week and next. Those units sold for an average price of $737. And as Tom alluded to earlier in the call, the lower per square foot is expected just given these are the smaller units on the lower floors.

Okay. So, Jade, this is just part of, I will put some more color on it. This is part of the strategy we are working on with Christie’s, our broker, and they have experience globally with these Ritz residences and other luxury hotel concepts where the lower units sell at lower prices early on, and then the higher-floor, larger units sell at higher prices later in the process that we phased in. We have bifurcated the 132 units, of which we are sold out now at 27%, into these four phases, and we are highly confident of our ability to achieve, on an average per-square-foot basis, the numbers in our projection plans.

Okay. That is good to hear. And then on the $855 million of loans sold in February, what is the sales price relative to par and relative to carrying?

Andrew, do you want to comment on that?

Yeah. So they sold in the high 90s. Carrying and UPB were right on top of each other. The pricing is the same there.

Thanks very much.

Thank you. Our next question comes from the line of Christopher Nolan with Ladenburg Thalmann. Please proceed with your question.

Tom, in your comments, you indicated that through repositioning the portfolio and dispositions, the leverage ratios are going to go down. How much was that again, please?

By one turn to 2.5x. The pro forma Ready Capital Corporation, if you will, is going to involve significantly less leverage with a multisector approach with a significant percentage of investment capacity being brought to bear by the external manager, Waterfall, which is a large private funds investor in commercial real estate debt and equity.

And then, for the debt maturities that you have coming up in the second half of the year, is the plan to retire that debt with just portfolio realizations and so forth?

Yeah. I will let Andrew comment on that. But as we said before, the broader liquidity plan is in excess of $800 million, which is a significant multiple of the total maturities. And we are 35% into that plan, and we are going to raise another $500 million, half through asset sales and half through runoff, which we have been running at a 36% repayment rate. These asset management strategies that Dom just talked about will enable us to outperform there. And we completed two of the four asset sales with the other two by the end of the second quarter. So given that plan, Andrew, what is the timing on the debt maturities?

Yeah. I would say, certainly, to the extent we can get execution levels that are accretive to the business from both an earnings perspective and a cash flow perspective, we would like to refi portions of the 2026 maturities. With that being said, as Tom highlighted, the liquidity plan currently underway certainly provides a substantial cushion to take out all of the three remaining maturities with cash if needed. I think you will see us sort of sequentially take out these bonds in the upcoming weeks and months, given the current liquidity position.

Okay. Thank you.

And our final question comes from the line of Chris Mueller with Citizens Capital Markets. Please proceed with your question.

Hey, guys. Thanks for taking the question. As you are focused on liquidity here, are there other monetization strategies that you would consider, like selling or spinning off a business line? And it also looks like there are a couple of GSE licenses up for sale right now. Maybe not the best time to be a seller there, but are there other avenues of raising some capital that you are looking at?

Yeah. That is a good question, Chris, and I appreciate you taking the time. There are a number of what we will call noncore assets that are not in this liquidity plan that we are entertaining potential dispositions. I think one area, you are right, we do have, in the form of TRS, taxable REIT subsidiaries, that could be sold. However, I will underscore our commitment to the SBA business, which is a high-ROE business and low capital allocation. We are strongly committed to that. However, there are other noncore assets that we are undertaking reviews for sale that could materially provide an additional buffer to the portfolio sales. But as far as the SBA, we are really committed to that and are looking at other smaller noncore assets for additional sale.

Got it. That is very helpful. Thanks for taking the question.

Thank you. And we have reached the end of the question-and-answer session. Therefore, I would like to turn the call back over to CEO, Thomas Capasse, for closing remarks.

Yeah. Again, I appreciate everybody’s time, and Ready Capital Corporation and our team remain highly confident of our ability to execute this liquidity plan and emerge in the latter half of this year in a position to improve the fundamental earnings capacity of the business and look forward to future calls.