United Development Funding IV Acquired by Ready Capital in $181 Million Deal

Ready Capital has agreed to acquire the embattled United Development Funding IV (UDF IV) in a transaction valued at $181 million. This acquisition takes place amidst ongoing tensions between UDF IV and NexPoint Real Estate Opportunities, which is attempting to replace UDF IV's board members. UDF IV, a real estate investment trust focusing on residential properties, has faced significant challenges, including a proxy battle and previous SEC sanctions for non-compliance. Ready Capital's acquisition allows UDF IV to distribute cash to shareholders, convert shares into Ready Capital stock, and potentially offer additional contingent value rights. As part of the acquisition, UDF IV shareholders will gain liquidity via shares traded on the New York Stock Exchange and will eventually own approximately 7% of Ready Capital. The deal also represents significant strategic growth potential for Ready Capital. Notably, Ready Capital will infuse leverage into UDF IV's portfolio, which had been running with no debt by the end of the previous year. Piper Sandler & Co. and Alston & Bird are advising Ready Capital financially and legally, respectively.