Ready Capital, a New York-based mortgage real estate investment trust, is laying the groundwork to capitalize on what it believes will be a rising number of distressed opportunities later this year.
“We have planted seeds with banks looking to offload loans and foresee quiet distressed selling in [the third and fourth quarters] as pressures on cleaning up balance sheets continue,” said Tom Buttacavoli, CIO.
In terms of core opportunities, Ready Capital identifies two distinct buckets – the first being non-distressed direct lending. “Through the calibration of LTV in lending, focusing on sponsors, credit quality, and location, we continue to see ample flow and opportunities, particularly within multifamily and industrial,” said Buttacavoli.
Other opportunities include ground-up financing and private securitizations
“We are actively planning for a business expansion in commercial construction given our ability to be more efficient and competitive than many banks,” Buttacavoli said. “While new issuers continue to struggle, we continue to bring product to market. Our edge is that we price loans daily and the interplay between capital markets and loan pricing will be critical for success.”
The REIT also believes today’s over-stimulated economy could result in a mild recession in mid- to late 2023 and set the stage for the company to capitalize on direct and indirect lending opportunities.
“We are experiencing an over-stimulated economy, resulting in a healthy slowdown that could inject a needed reset for long-term prospects of the economy. Particularly among labor participation, it could spur a new mindset and shake up a generation crashing from a sugar high,” Buttacavoli said.