Ready Capital and United Development Funding IV Announce Definitive Agreement for Ready Capital to Acquire United Development Funding IV
Ready Capital (NYSE:RC) has announced a definitive merger agreement to acquire United Development Funding IV (UDF IV). UDF IV shareholders will receive up to $5.89 per share through: (i) pre-closing distributions up to $2.44 per share, (ii) Ready Capital shares valued at $3.07 per share, and (iii) contingent value rights worth up to $0.38 per share. The transaction will expand Ready Capital's portfolio with UDF IV's land development lending platform, creating a combined company with over $2.2 billion in equity capital. UDF IV shareholders will own approximately 7% of Ready Capital's outstanding shares post-merger. The deal is expected to close in first half of 2025, subject to UDF IV shareholder approval.
Ready Capital (NYSE:RC) ha annunciato un accordo di fusione definitivo per acquisire United Development Funding IV (UDF IV). Gli azionisti di UDF IV riceveranno fino a $5.89 per azione tramite: (i) distribuzioni pre-chiusura fino a $2.44 per azione, (ii) azioni di Ready Capital valutate a $3.07 per azione, e (iii) diritti di valore contingente del valore fino a $0.38 per azione. La transazione amplificherà il portafoglio di Ready Capital con la piattaforma di prestiti per lo sviluppo del territorio di UDF IV, creando un'azienda combinata con oltre $2.2 miliardi di capitale azionario. Gli azionisti di UDF IV possiederanno circa il 7% delle azioni in circolazione di Ready Capital dopo la fusione. Si prevede che l'affare si chiuda nella prima metà del 2025, soggetto all'approvazione degli azionisti di UDF IV.
Ready Capital (NYSE:RC) ha anunciado un acuerdo de fusión definitivo para adquirir United Development Funding IV (UDF IV). Los accionistas de UDF IV recibirán hasta $5.89 por acción a través de: (i) distribuciones previas al cierre de hasta $2.44 por acción, (ii) acciones de Ready Capital valoradas en $3.07 por acción, y (iii) derechos de valor contingente por un total de hasta $0.38 por acción. La transacción ampliará la cartera de Ready Capital con la plataforma de préstamos para desarrollo de tierras de UDF IV, creando una empresa combinada con más de $2.2 mil millones en capital propio. Los accionistas de UDF IV poseerán aproximadamente el 7% de las acciones en circulación de Ready Capital después de la fusión. Se espera que el acuerdo se cierre en la primera mitad de 2025, sujeto a la aprobación de los accionistas de UDF IV.
레디 캐피탈 (NYSE:RC)은 유나이티드 개발 펀딩 IV (UDF IV)를 인수하기 위한 최종 합병 계약을 발표했습니다. UDF IV의 주주들은 (i) 사전 마감 배당금으로 최대 $2.44 per share, (ii) 주당 $3.07의 가치가 있는 레디 캐피탈 주식, (iii) 주당 최대 $0.38의 가치가 있는 조건부 가치 권리를 통해 주당 최대 $5.89를 받을 것입니다. 이 거래는 UDF IV의 토지 개발 대출 플랫폼을 통해 레디 캐피탈의 포트폴리오를 확장하여, 22억 달러 이상의 자본을 가진 결합 회사를 만들어낼 것입니다. UDF IV의 주주들은 합병 후 레디 캐피탈의 유통 주식의 약 7%를 소유하게 됩니다. 이 거래는 UDF IV 주주들의 승인을 조건으로 2025년 상반기 내에 마감될 것으로 예상됩니다.
Ready Capital (NYSE:RC) a annoncé un accord de fusion définitif pour acquérir United Development Funding IV (UDF IV). Les actionnaires de UDF IV recevront jusqu'à 5,89 $ par action par le biais de : (i) des distributions avant la clôture d'un maximum de 2,44 $ par action, (ii) des actions de Ready Capital valorisées à 3,07 $ par action, et (iii) des droits de valeur conditionnelle d'une valeur maximale de 0,38 $ par action. La transaction élargira le portefeuille de Ready Capital avec la plateforme de prêts au développement foncier de UDF IV, créant une entreprise combinée avec plus de 2,2 milliards $ de capital propre. Les actionnaires de UDF IV posséderont environ 7 % des actions en circulation de Ready Capital après la fusion. L'accord devrait se clore dans la première moitié de 2025, sous réserve de l'approbation des actionnaires de UDF IV.
Ready Capital (NYSE:RC) hat eine endgültige Fusionsvereinbarung zur Übernahme von United Development Funding IV (UDF IV) bekannt gegeben. Die Aktionäre von UDF IV erhalten bis zu 5,89 $ pro Aktie durch: (i) Vorabschlussverteilungen von bis zu 2,44 $ pro Aktie, (ii) Ready Capital-Aktien im Wert von 3,07 $ pro Aktie und (iii) bedingte Wertrechte im Wert von bis zu 0,38 $ pro Aktie. Die Transaktion wird das Portfolio von Ready Capital mit der Kreditplattform für die Grundstücksentwicklung von UDF IV erweitern und ein kombiniertes Unternehmen mit über 2,2 Milliarden $ Eigenkapital schaffen. Die Aktionäre von UDF IV werden nach der Fusion etwa 7 % der ausstehenden Aktien von Ready Capital besitzen. Der Deal soll in der ersten Hälfte des Jahres 2025 abgeschlossen werden, vorbehaltlich der Genehmigung durch die Aktionäre von UDF IV.
- Expected to generate meaningful distributable earnings accretion in 2025 and 2026
- Minimal book value dilution with one-quarter earnback period
- Increases equity capital base to over $2.2 billion
- Expands into residential land loans in Dallas-Fort Worth market
- Builds on existing relationship with over $110 million in previous successful loans
- 7% shareholder dilution through issuance of approximately 12.8 million new shares
- Integration risks associated with merging lending platforms
- Execution risk in expanding into new market segment
Insights
This merger represents a significant strategic move for Ready Capital, with several key financial implications. The
The deal will increase Ready Capital's equity capital base to over
This acquisition strategically positions Ready Capital in the high-growth residential land development sector, particularly in the Dallas-Fort Worth market - a leading U.S. residential market with significant unmet housing supply. The integration of UDF IV's proven land development lending platform diversifies RC's portfolio and creates a stronger residential construction lending presence.
The existing relationship between the companies, having funded over
Adds scale and extends Ready Capital’s core platform with UDF IV’s proven land development lending platform
Diversifies Ready Capital’s portfolio and offers land development solution to borrowers and investors
Expected to be accretive to Ready Capital’s earnings and book value in 2025
UDF IV shareholders may receive up to
NEW YORK and IRVING, Texas, Dec. 02, 2024 (GLOBE NEWSWIRE) -- Ready Capital Corporation (NYSE:RC) ("Ready Capital"), a multi-strategy real estate finance company that originates, acquires, finances and services lower-to-middle-market investor and owner-occupied commercial real estate loans, and United Development Funding IV (“UDF IV” or the “Trust”), a real estate investment trust providing capital solutions to residential real estate developers and regional homebuilders, announced today that they have entered into a definitive merger agreement pursuant to which Ready Capital will acquire UDF IV. Upon completion of the transaction, Ready Capital is anticipated to have a pro forma equity capital base in excess of
Under the terms of the merger agreement, UDF IV will be permitted to distribute up to
Following such distribution, as part of the merger consideration, each share of UDF IV common stock will then be converted into 0.416 shares (the “Exchange Ratio”) of Ready Capital common stock, with UDF IV shareholders receiving a total of approximately 12.8 million shares of Ready Capital common stock. The Exchange Ratio was negotiated to reflect an adjustment for the expected Pre-Closing Distribution, as well as other valuation adjustments. Based on Ready Capital’s closing share price on November 29, 2024, the implied value of the Ready Capital shares expected to be issued in connection with this closing is approximately
In addition, as part of the merger consideration, UDF IV shareholders will be entitled to receive additional stock consideration after closing under contingent value rights (“CVRs”) to be issued by Ready Capital, which UDF IV management estimates will generate payments of up to
“The UDF IV transaction will allow us to scale our portfolio and expand our core business, unlocking exciting growth and value creation opportunities,” said Thomas Capasse, Chairman and Chief Executive Officer of Ready Capital. “The acquisition of UDF IV will further differentiate our ability to provide investors and borrowers with a range of financing solutions, and we expect to leverage our resources to drive growth in the land development vertical.”
“This transaction marks an exciting milestone for UDF IV that will provide significant value and liquidity to our shareholders,” said James Kenney, Managing Trustee and Chief Executive Officer of UDF IV. “The transaction enables us to make a meaningful cash distribution to our shareholders, who will also benefit from ownership in a scaled, diversified and publicly traded industry leader.”
The combined company will continue to operate under the name Ready Capital and its shares are expected to continue trading on the New York Stock Exchange under the existing ticker symbol "RC" and Waterfall Asset Management, LLC will continue to manage the combined company.
Anticipated Benefits to Ready Capital Stockholders from the Merger
- Financially Compelling. Transaction is expected to generate meaningful distributable earnings accretion in 2025 and 2026, minimal book value dilution at closing with an earnback period of only one quarter, and projected returns well in excess of Ready Capital’s cost of equity capital
- Attractive Portfolio Attributes. Ready Capital is acquiring a portfolio of pure-play residential land loans concentrated in Dallas-Fort Worth, a top performing U.S. residential market, which is well positioned to benefit from significant unmet housing supply
- Catalyst for Ready Capital Residential Platform. Addition of UDF IV grows Ready Capital’s existing residential construction / single family residential lending platform, gives access to a robust pipeline of forward flow and gives Ready Capital the ability to expand into new markets with strong fundamentals
- Established Relationship. Ready Capital and Waterfall have a lengthy history with UDF IV and its affiliates, having funded more than
$110 million of loans over the last 10 years with all loans to date having paid off
Anticipated Benefits to UDF IV Shareholders from the Merger
- Meaningful Upfront Cash Distribution. The transaction facilitates significant cash distributions to UDF IV shareholders, estimated to be up to
$2.44 per share between now and closing of the transaction - Provides Liquid Stock Consideration and Upside Potential. As owners of Ready Capital shares, UDF IV shareholders would own a NYSE-listed stock with a 10-day average daily volume of 1.41 million shares and a current dividend yield of
13.6% - Future CVR Potential. Provides opportunity for UDF IV shareholders to receive contingent consideration and aligns incentives to generate further value from selected assets in the UDF IV portfolio
- Enhanced Platform; Diversification; Expertise. Enables UDF IV investors to benefit from an efficient, scalable operating platform, a diversified business model, exposure to an existing broad pool of real estate debt investments, and access to the extensive expertise and resources of Ready Capital’s external manager, Waterfall
Additional information about the transaction and its anticipated benefits can be found in the investor presentation relating to the merger on Ready Capital's website. The investor presentation has also been furnished by Ready Capital in a Current Report on Form 8-K filed with the Securities and Exchange Commission (the "SEC") on the date hereof.
Management, Governance and Corporate Headquarters
Upon completion of the merger, Ready Capital’s Chairman, Chief Executive Officer and Chief Investment Officer, Thomas Capasse, will continue to lead the company and Ready Capital executives Jack Ross, Andrew Ahlborn, Gary Taylor and Adam Zausmer will remain in their current roles. The combined company will remain headquartered in New York, New York.
CVR Details
Under the terms of the CVR, UDF IV shareholders will have the right to receive additional shares of Ready Capital common stock with a value equal to
Other Transaction Information
The transaction has been unanimously approved by the Board of Directors of Ready Capital and the Board of Trustees of UDF IV, acting upon the unanimous recommendation of a special committee of UDF IV’s independent trustees. The transaction is expected to close in the first half of 2025, subject to the approval of UDF IV shareholders and other customary closing conditions.
Advisors
Piper Sandler & Co. is serving as exclusive financial advisor to Ready Capital and Alston & Bird LLP is serving as its legal advisor. Moelis & Company LLC is serving as exclusive financial advisor to UDF IV, Gibson, Dunn & Crutcher LLP is serving as legal advisor to UDF IV and Holland & Knight LLP is serving as legal advisor to the special committee of the UDF IV Board of Trustees.
Additional Information about the Merger
In connection with the proposed merger, UDF IV expects to call a special meeting of its shareholders to approve the merger and to distribute a proxy statement and other documents to its shareholders in connection with the special meeting and Ready Capital expects to file with the SEC a registration statement on Form S-4, containing a prospectus and the UDF IV proxy statement, and other documents with respect to the proposed merger. The Ready Capital prospectus and the UDF IV proxy statement will contain important information about the proposed transaction and related matters. SHAREHOLDERS OF UDF IV ARE URGED TO READ THE REGISTRATION STATEMENT, THE PROSPECTUS AND THE UDF IV PROXY STATEMENT (INCLUDING ALL AMENDMENTS AND SUPPLEMENTS TO EACH OF THEM) AND OTHER RELEVANT DOCUMENTS FILED BY READY CAPITAL WITH THE SEC AND MADE AVAILABLE BY UDF IV CAREFULLY IF AND WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT READY CAPITAL, UDF IV AND THE PROPOSED MERGER.
UDF IV shareholders may obtain free copies of the registration statement, the prospectus and other relevant documents filed by Ready Capital with the SEC (if and when they become available) through the website maintained by the SEC at www.sec.gov. Copies of the documents filed by Ready Capital with the SEC are also available free of charge on Ready Capital's website at www.readycapital.com. UDF IV shareholders may obtain free copies of the proxy statement and other relevant documents made available by UDF IV free of charge on UDF IV’s website at www.udfonline.com.
This communication shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the U.S. Securities Act of 1933, as amended (the “Securities Act”).
Forward-Looking Statements
This press release contains statements that constitute “forward-looking statements,” as such term is defined in Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended, and such statements are intended to be covered by the safe harbor provided by the same. These statements relate to, among other things, the timing of the closing of the merger, the benefits of the proposed merger, the estimated amount of the special dividend to be paid to UDF IV’s shareholders, and the estimated consideration expected to be paid under the CVRs. Such forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “anticipate,” “estimate,” “believe,” or other similar words, are based on current expectations and beliefs of Ready Capital and UDF IV and are subject to a number of trends and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Neither Ready Capital nor UDF IV can provide any assurance that their expectations will be attained.
Factors that could cause actual results to differ materially from expectations include, but are not limited to, the risk that the merger will not be consummated within the expected time period or at all; the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement; the inability to obtain UDF IV shareholder approval of the merger or the failure to satisfy the other conditions to completion of the merger; risks that will affect the amount of the special dividend to UDF IV shareholders, including, among others, developments in litigation involving UDF IV; risks that will affect the amount of payments under the CVRs, if any, including, among others, the performance of the specified UDF IV loans and developments in litigation involving UDF IV; risks related to disruption of management attention from the ongoing business operations due to the proposed merger; the effect of the announcement of the proposed merger on the operating results and businesses generally of Ready Capital and UDF IV; the outcome of any legal proceedings relating to the merger; the ability to retain key personnel; availability of suitable investment opportunities; changes in interest rates; changes in the yield curve; changes in prepayment rates; the availability and terms of financing; general economic conditions; market conditions; inflationary pressures on the capital markets and the general economy; conditions in the market for small balance commercial loans and other investments; legislative and regulatory changes that could adversely affect the businesses of Ready Capital and UDF IV; risks related to integrating an existing lending platform into Ready Capital’s operations; and other factors, including those set forth in the Risk Factors section of Ready Capital’s most recent Annual Report on Form 10- K and other reports filed by Ready Capital with the SEC, copies of which are available on the SEC's website, www.sec.gov. Neither Ready Capital nor UDF IV undertakes any obligation to update these statements for revisions or changes after the date of this press release, except as required by law.
About Ready Capital Corporation
Ready Capital Corporation (NYSE: RC) is a multi-strategy real estate finance company that originates, acquires, finances and services lower-to-middle-market investor and owner occupied commercial real estate loans. The Company specializes in loans backed by commercial real estate, including agency multifamily, investor, construction, and bridge as well as U.S. Small Business Administration loans under its Section 7(a) program. Headquartered in New York, New York, the Company employs approximately 350 professionals nationwide.
About United Development Funding IV
United Development Funding IV is a Maryland real estate investment trust. UDF IV was formed primarily to generate current interest income by investing in secured loans and producing profits from investments in residential real estate. Additional information about UDF IV can be found on its website at www.udfiv.com. UDF IV may disseminate important information regarding its operations, including financial information, through social media platforms such as X, Facebook and LinkedIn.
Contacts:
Ready Capital
Investor Relations
Ready Capital Corporation
212-257-4666
InvestorRelations@readycapital.com
Ready Capital Media Relations
PR@readycapital.com
UDF IV
Investor Contact:
Investor Relations
1-800-859-9338
investorrelations@umth.com
Media Contact:
Mahmoud Siddig / Lucas Pers / Dylan O’Keefe
Joele Frank, Wilkinson Brimmer Katcher
(212) 895-8668
FAQ
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