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Texas-based real estate investment trust (REIT) with a tumultuous past is poised for a new beginning. Ready Capital, a New York real estate finance firm, plans to acquire United Development Funding IV in a $181 million deal. This acquisition will bring significant opportunities for growth and value creation.

    United Development Funding IV has been a major player in financing single-family residential developments since 2008, originating $1.6 billion in loans that have facilitated the creation of 62,000 residential lots and 1,000 homes across Texas cities. However, the company's legacy was marred by a federal criminal case in 2022, resulting in the convictions of former executives on securities fraud charges.

    Under new leadership, United Development Funding IV has sought to stabilize and reposition itself, ultimately leading to the acquisition agreement with Ready Capital. The merger will "unlock exciting growth and value creation opportunities," according to Ready Capital CEO Thomas Capasse.

    Shareholders of United Development Funding IV stand to benefit from the deal, receiving a pre-closing cash distribution of up to $75 million and shares in Ready Capital valued at $3.07 per share. Post-distribution, they will receive Ready Capital stock, resulting in a combined ownership stake of approximately 7 percent.

    The combined entity will operate under the Ready Capital name, retaining its New York headquarters. The deal is expected to close next year, pending shareholder and regulatory approvals.