Ready Capital, a real estate finance company that originates, acquires, finances and services small- to medium-sized balance commercial loans, including agency multifamily, investor and bridge, is set to grow its lending platform through a merger with Owens Realty Mortgage.
Owens Realty Mortgage focuses on the origination, investment, and management of commercial real estate mortgage loans, and now the two companies will be operating under the same umbrella.
According to the two companies, the deal will be a stock-for-stock merger. Under the terms of the deal, each Owens Realty share will be converted into 1.441 Ready Capital shares.
Upon completion of the deal, Ready Capital stockholders are expected to own approximately 72% of the combined company’s stock, while Owens Realty Mortgage stockholders are expected to own approximately 28%.
The combined company will operate under the Ready Capital name and is expected to have pro forma equity capital of more than $750 million.
The companies say the combination will “enhance shareholder liquidity and provide for operating leverage across the larger equity base.”
The companies also state one of the benefits of the deal will be more capital on hand to support the continued growth of Realty Capital’s lending platform.
Upon completion of the deal, Ready Capital Chairman and CEO Thomas Capasse will lead the combined company, while Frederick Herbst, Ready Capital chief financial officer, will remain in that role.
“This merger highlights our continued commitment to driving shareholder value and liquidity. We believe the transaction raises incremental capital with minimal tangible book value dilution and is accretive to forward looking earnings per share,” Capasse said in a statement. “The combined company will be in a stronger position to execute our business plan, improve operating and cost efficiencies and continue growth in a profitable manner.”
The deal is expected to close by the end of the first quarter of 2019, the companies said.
“We are excited to have reached an agreement for the sale of Owens Realty Mortgage to Ready Capital and believe that our shareholders will benefit from the better access to financing, larger size and greater resources of the combined company,” ORM President Bryan Draper said.