A securities class action has been filed in the USDC – W.D.WA. against Broadmark Realty Capital Inc. (BRMK) (“Broadmark” or the “Company”), on behalf of all persons and entities that purchased or otherwise acquired Broadmark common stock at the close of business on April 17, 2023, the record date to vote on the merger of Broadmark and Ready Capital Corporation (“Ready Capital”).
Broadmark is a REIT based in Seattle, Washington. Broadmark’s typical borrowers include real estate investors, developers, and other commercial borrowers. Broadmark generally uses loan proceeds to fund the vertical construction, horizontal development, investment, land acquisition, and refinancing of residential properties and commercial properties. Broadmark also makes loans to fund the renovation and rehabilitation of residential and commercial properties. Broadmark loans are generally structured with an initial advance at closing and additional loan installments disbursed to the borrower upon satisfactory completion of previously agreed stages of construction.
Ready Capital is a real estate finance company that originates, acquires, and services commercial loans. Ready Capital’s core strategy is to target small-to-medium balance commercial (“SBC”) loans used in the development of multifamily residential properties, which Ready Capital claims generally range in amounts of up to $40 million. Ready Capital offers SBC loans to finance the full life cycle of a property, including initial construction, transitional bridge financing, and stabilized properties.
The case arises from materially false and misleading statements made in the joint proxy statement used to solicit the support of Broadmark shareholders for the Merger, which was prepared and disseminated by defendants.
The Complaint alleges that the Proxy were materially false and misleading when made because they failed to disclose and/or misrepresented:
(1) that a material portion of borrowers within Ready Capital’s originated portfolio were experiencing significant financial distress due to high interest rates that had increased their borrowing costs;
(2) that an oversupply of multifamily properties in Ready Capital’s markets of operation had severely limited the ability of Ready Capital borrowers to raise their rents by the amounts necessary to cover their growing debt costs;
(3) that a major development project acquired in the Mosaic Merger had experienced catastrophic setbacks since its inception
(4) Ready Capital’s CECL reserves and expected credit losses were materially understated;
(5) Ready Capital’s financial projections regarding Ready Capital’s Distributable Earnings per share, dividends per share, and book value per share had no basis in fact when made, thereby harming investors.
The price of Ready Capital stock has declined precipitously since the Merger, falling to lows of less than $4 per share, and has remained significantly below the Merger price.
If you purchased Broadmark common stock at the close of business on April 17, 2023, the record date to vote on the merger of Broadmark and Ready Capital Corporation (“Ready Capital”) and would like to receive more information or join the action, please enter your contact information below for a FREE consultation and click “Submit Your Information”.