Ready Capital Corporation Proposal

Flashcards about the Ready Capital Corporation Proposal

Ready Capital

A multi-strategy real estate finance company and publicly-traded real estate investment trust (NYSE: RC) that originates, acquires, and services small-to-medium commercial real estate loans.

Waterfall Asset Management

Provides Ready Capital with significant advantages in sourcing, evaluating, underwriting, and managing investments; a top 10 global manager focused on real estate loans and ABS.

Proposed Transaction

An acquisition of 100% of the outstanding interests of Mosaic by Ready Capital, a publicly traded real estate investment trust (NYSE: RC).

Contingent Value Right (CVR)

Ready Capital is willing to provide Mosaic investors to recover up to 80% of the fair value discount with a term of three years.

Upfront Manager Compensation

Ready Capital envisions that the Selling Manager will receive 4.0% of Mosaic’s pro-forma unadjusted book value pre-close (net of Mosaic’s portion of transaction expenses) as an upfront payment, the payment of which will be shared pro rata by Mosaic and Ready Capital per their respective ownership of the pro forma combined company.

Deferred Manager Compensation

The Selling Manager will receive Liquidating Units entitled to future deferred payments up to [40]% of the excess return above a [10]% internal rate of return hurdle realized by Ready Capital from its acquisition of the Company’s assets.

Acquisition Rationale

Ready Capital is highly-motivated to pursue this acquisition, as we believe Mosaic will help us accelerate the realization of our longer-term strategic objectives includingEnhanced scale that will benefit all investors through enhanced operating leverageAccess to additional capital to expand our diversified investment strategy across small balance commercial real estate, residential mortgage, and other real estate lending productsOpportunity to expand our investment strategy to include construction lending assets, which have a complementary risk profile to our existing focus.

Base Management Fee

calculated and payable quarterly in arrears equal to 1.5% per annum of Ready Capital’s stockholders’ equity up to $500 million and 1.0% per annum of stockholders’ equity in excess of $500 million

Incentive Fee

Waterfall is entitled to an incentive distribution in an amount equal to the product of (i) 15% and (ii) the excess of (a) Distributable Earnings on a rolling four- quarter basis over (b) an 8.00% Core ROE

“Exclusivity Period”

The period 45 days following the date hereof (the “Initial Expiration Time”); provided, that if neither party has given written notice to the other party, prior to the Initial Expiration Time, that it objects to the extension of the Exclusivity Period, the Exclusivity Period shall be automatically extended until the 60th day following the date hereof.