10 Worst Performing REITs in 2024

8. Ready Capital Corporation (NYSE:RC)

Year-to-Date Decline: 28.15%

Number of Hedge Fund Holders: 10

Ready Capital Corporation (NYSE:RC) is a commercial mortgage REIT that originates, acquires, finances, and services small- to medium-sized balance commercial loans. Ready Capital’s external manager is Waterfall Asset Management, a global alternative investment manager that is focused on specialty finance opportunities within asset-backed credit, whole loans, real assets, and private equity. The REIT operates through two segments including LMM commercial real estate and Small Business Lending.

Ready Capital Corporation boasts a $10.0 billion portfolio of over 6,700 loans diversified across 50 states and Europe with 99% first lien. The firm has been an active acquiror in the multi-strategy real estate finance sector and has completed ten transactions since 2014 which includes four public company mergers. Furthermore, the REIT has a successful and proven asset manager with a solid 19-year investment record.

The REIT benefits from the increased opportunity that arises due to the retrenchment of banks from the LMM commercial real estate market. Due to the portfolio management expertise needed to manage these loan assets, competition for LMM commercial real estate loan asset acquisitions remains limited. Simultaneously, the REIT serves as a leading provider of capital to small businesses through 7(a) loans and USDA loans through the Small Business Lending business.

Although Ready Capital Corporation (NYSE:RC) realized a net loss in the second quarter, CEO Thomas Capasse emphasized how the REIT has been focusing on cycling out of underperforming assets and into market-yielding investments. According to him, the record growth in the firm’s Small Business Lending business as well as improving credit metrics across the loan portfolio position the firm to improve its earnings moving forward. Q2 highlights include total investments of $474 million which includes $257 million of LMM originations and a record $217 million of US Small Business Administration 7(a) loans.

The REIT’s historical balance sheet reflects that its total assets have grown at a 27% CAGR from 2017 to June 2024 while the equity has grown nearly 5x since 2017. Ready Capital Corporation (NYSE:RC) has also managed to grow its distributable earnings at an 18% CAGR between 2017 and June 2024.