Ready Capital: Now Comes The Book Value Drop And A Liquidity Crunch

2026-02-23 11:25:52 ET

In my initial piece on Ready Capital (NYSE: RC), Accounting Changes Mask Negative Adjusted Operating Cash Flows and Unsupported Dividend , I predicted a dividend cut, a reduction in book value, and a liquidity crunch due to the poor quality of RC’s loan book, the prevalence of Paid-In-Kind (PIK) interest, and the exhaustion of interest reserves. At the time my article was published in December of 2024, RC was paying a dividend of $0.25/share a quarter. Subsequently, RC has cut its dividend twice, and it is currently paying $0.01 per quarter. However, the decline in book value and the liquidity issues that I foresaw have not yet fully materialized. At the end of 3Q25, RC still had a book value per share of $10.28 ( RC 3Q25 Financial Supplemental p. 3 ) versus a share price of $1.76 on 2/20/26. While the drastic reduction in the common dividend has removed a significant use of cash, I believe RC’s book value is poised to move lower, and near-term liquidity pressures may lead to the elimination of the common dividend and a reduction or suspension of the preferred dividend. Over the last two quarters, Distributable Earnings BEFORE Realized Losses have not even covered the preferred dividends for Ready Capital Preferred C (NYSE: RC.PR.C ) and Preferred E (NYSE:RC.PR.E), as shown below....

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