Ready Capital Acquires Red Stone

The purchase will boost the firm's affordable housing business.
Photo by rawpixel via Unsplash

Ready Capital Corp., a New York-based real estate company that originates, acquires, finances and services small to medium balance commercial loans, is expanding its footprint in the affordable housing sector with the acquisition of Red Stone and its affiliates.

Specific terms of the transaction were not disclosed. However, Ready Capital stated it had acquired Red Stone and its entities in exchange for cash and stock as well as the assumption of certain Red Stone guarantees of secure indebtedness. 

The management team of Red Stone, a privately-owned real estate finance and investment company that provides financial products and services to the affordable housing industry, led by Chairman & Co-Founder John Sokolovic, have all joined Ready Capital. Red Stone and its affiliate companies have offices in New York City; Garden City, N.Y.; and St. Paul, Minn. In addition to its Manhattan office, Ready Capital has two other main offices in Irving, Texas, and Berkeley Heights, N.J., along with satellite offices throughout the United States.

Growth opportunity

Sokolovic said in a prepared statement joining the Ready Capital team would enable Red Stone to continue to grow its business and serve its clients, financial partners and the affordable housing community while adding value for Ready Capital’s shareholders. Since its founding in 2002, Red Stone has provided more than $4.6 billion of mortgage debt and equity capital used to finance 63,032 apartment units in affordable and mixed-income rental properties. Red Stone focuses on providing acquisition, development period and permanent mortgage capital on properties financed utilizing tax-exempt and taxable bonds.

Tom Capasse, chairman & CEO of Ready Capital, said in prepared remarks affordable housing finance presents a significant growth opportunity that will benefit shareholders by expanding the firm’s presence in a sector with low correlation to its other businesses. Ready Capital specializes in loans backed by commercial real estate, including agency multifamily, investor and bridge loans as well as SBA 7(a) business loans.

In March, Ready Capital provided a $104 million three-year floating-rate loan arranged to Panoramic Interests to refinance a construction loan for City Gardens, an eight story, 200-unit recently completed multifamily property in San Francisco. Capasse said the Red Stone team has enormous talent and they looked forward to building on that success.

Ready Capital received financial advice on the transaction from Houlihan Lokey and legal advice from Clifford Chance US LLP. Red Stone received financial advice from Riparian Partners and legal advice from Jones Day.