Rithm Property Trust Q4 2025 Earnings Call - Recap Plan: $1.60-$1.70 EPS Target If Capital Raised

Conference Operator: Thank you for standing by. At this time, I would like to welcome everyone to the Rithm Property Trust Fourth Quarter 2025 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, press star 1 again. Thank you. I would now like to turn the call over to Emma Holke, Deputy General Counsel. You may begin.

Emma Holke, Deputy General Counsel, Rithm Property Trust: Thank you, and good morning, everyone. I would like to thank you for joining us today for Rithm Property Trust fourth quarter and full year 2025 earnings call. Joining me today are Michael Nierenberg, Chief Executive Officer of Rithm Capital and Rithm Property Trust, and Nick Santoro, Chief Financial Officer of Rithm Capital and Rithm Property Trust. Throughout the call, we are going to reference the earnings supplement that was posted this morning to the Rithm Property Trust website, www.rithmpropertytrust.com. If you’ve not already done so, I’d encourage you to download the presentation now. I would like to point out that certain statements made today will be forward-looking statements, including any statements regarding illustrative portfolios or earnings. These statements, by their nature, are uncertain and may differ materially from actual results.

I encourage you to review the disclaimers in our press release and earnings supplement regarding forward-looking statements and to review the risk factors contained in our annual and quarterly reports filed with the SEC. In addition, we will be discussing some non-GAAP financial measures during today’s call. Reconciliations of these measures to the most directly comparable GAAP measures can be found in our earnings supplement. With that, I will turn the call over to Michael.

Michael Nierenberg, Chief Executive Officer, Rithm Capital and Rithm Property Trust: Thanks, Emma. Good morning and happy Friday the thirteenth. Thanks for joining us on Rithm Property Trust, our fourth quarter earnings call. Just a few things. While investment activity remained light, away from, you know, a small investment that Rithm Property Trust made in the Paramount transaction that our parent, Rithm, announced in December, the balance sheet, cash, you know, the company remains in great shape. During the fourth quarter, we also announced a reverse split of our shares on a 6-to-1. So when you look at it today, obviously, you know, with the stock trading something between $15 and $16 versus where it was, you know, I think it was something around $2, right?

You know, we feel like it’s gonna hopefully attract more interest in the stock with a higher—obviously, a higher share price, recognizing that we did do a reverse split. As many of you know, and we’ve said this repeatedly, we took over the management contract of what was formerly known as Great Ajax in June of 2024, with the intent of making it a dedicated commercial real estate vehicle, as well as an opportunistic investment vehicle. What we did then is we repositioned the company, we cleaned up the balance sheet, we raised capital, and today we remain focused on what I would say is a potential recap of the company, along with earnings and dividend growth.

We have a clear path, which depends on capital formation, to be clear, to take the company from flat earnings to a future state where the company’s earning something between $1.60 and $1.70 per share, and trades give or take about a 9% dividend yield with a book value of approximately $20. That all depends on, one, the recap, and two, where you actually raise the capital. The plan for the vehicle would be to acquire multifamily loans from our operating business, Genesis, which we have already identified those, that pool of loans, along with other commercial real estate investments. So there will be no J-curve as we think about earnings growth and where we’re going with the vehicle. Today, as we know, many REITs, BDCs, and other capital vehicles are not trading well.

And while we will be patient, we hope to accomplish this when the market stabilize. I’ll now refer to the supplement, which we have posted online, and I’m gonna begin on page 3. So, when you look at the company today, obviously there’s a pretty active investment pipeline. The company today sits with, give or take, about $100 million of cash and liquidity. Total equity in the vehicle is $300 million, and when you look at our trading price, which I think is something around 15, 15 dollars, the company is trading at roughly, you know, give or take, something around 50% of book. When we look at the vehicle, it is externally managed by Rithm.

So when you look across the firm, we have a ton of real estate investment professionals and others, which are here to support the vehicle and support the growth. As you all know, we’ve done this before when we started New Residential back at Fortress in 2013, and we hope to achieve the same level of growth and success from an earnings perspective and a growth perspective in this vehicle as we go forward. When you look at financial highlights, you know, earnings were flat. We took over this thing, as I pointed out, in June of 2024, where the company wasn’t making any money. You look at Q4, GAAP earnings, $2.5 million. EAD is kind of -$500,000, which leads to per diluted share of $0.06.

Negative book value, as we pointed out, was about $300 million, or $31 per diluted share. Common stock dividend that we pay, we’re gonna continue to pay that dividend, is 8.7% from a dividend yield perspective. And then, as I pointed out, cash and liquidity, it’s give or take about $100 million. Really, the whole play here is you have a clean balance sheet, you have a clean company, you have a dislocated sector in the real estate space, you have many commercial REITs which are underwater because they have either liquidity issues or they have a balance sheet that continues to need to get cleaned up. For us, we’re gonna be patient. We’re not gonna keep this vehicle outstanding forever.

But while saying that, having a clean vehicle where we want to recap this, similar to what Blackstone did around BXMT with CapTrust, I think it was, that is our ultimate goal here as we look to grow the vehicle. And it’s not just about growth, it’s, you know, how do we make our shareholders money? We do think that this and then some of, you know, a lot of the capital vehicles, including Rithm and RPT, are trading at extremely low valuations. So hopefully, they right themselves. But as we think about this vehicle, we will be patient. We are sitting on cash and liquidity.

We do want to do a recap, and we think from an opportunistic standpoint, we have the assets that’ll now take this business to grow earnings to something between $1.60 and $1.70 per share, assuming that we do a recap of the vehicle. When you look at the portfolio on page six, you know, what are we gonna do with it? We speak about multifamily loans, our Genesis business, which we bought from Goldman in 2022. At that time, they were doing $1.7 billion in production. You know, this year, I think we’re projecting, we’re gonna do something between $6 billion and $7 billion of production. We’re gonna be growing our multifamily lending business.

We are seeing some potential opportunities in that space, even around acquiring licenses to become a Fannie Freddie servicer or originator in the multifamily space. So that’s something that we’re currently working on. Obviously, we’re making a big push in the commercial real estate space. We announced the acquisition of Paramount. We love that transaction. It’ll take a little bit of time, but we’re really excited about where we sit there, our entry level, our basis, and where we’re gonna go with that company. And then when we think about opportunistic investments, we’ve been very good at identifying them and acquiring them through the course of our careers, but taking the company back to 2013, you know, on the New Residential slash Rithm level.

When you look at page seven, we talk about our ability to source, whether it be at the Rithm parent level, whether it be at Genesis, whether it be at Paramount. Obviously, we announced the closing of Crestline, who in December, and then along with our partners at Sculptor, we have a lot of opportunity to source product. Looking ahead at the opportunity on page eight, you know, commercial real estate, we love the office story. I know there’s you know, yesterday, obviously, with with you know, the AI story, a lot of the commercial real estate REITs got hit. The one thing I want to point out from a company perspective, both at the Rithm level and in RPT, we have a very diversified business.

If you look at Rithm’s earnings in the fourth quarter, we produced north of $400 million in earnings available for distribution. We had certain things that performed extremely well, other things where we had, for example, higher amortization in our mortgage company. But net-net, when you look at that business and you look at our, look at our diversified earning streams, whether it be at Rithm, Rithm Property Trust, we’re very good at, in my opinion, at creating diversified earning streams, that if one lever is not being, working great, another level will work great. So when we look at the opportunity here for RPT, obviously, commercial real estate, we like a lot.

There will be other things in the opportunistic space, that we think are gonna be highly accretive to what we’re gonna do in this vehicle as well, and we look forward to executing around that. So with that, I’ll turn it back to the operator. We’ll open up for some Q&A.

Conference Operator: At this time, I would like to remind everyone, in order to ask a question, press star, then the number one on your telephone keypad. Your first question comes from Craig Cucchiara with Lucid Capital Markets. Please go ahead.

Craig Cucchiara, Analyst, Lucid Capital Markets: Hey, good morning, guys.

Michael Nierenberg, Chief Executive Officer, Rithm Capital and Rithm Property Trust: Morning.

Craig Cucchiara, Analyst, Lucid Capital Markets: You know, I think the Paramount transaction at Rithm Capital closed for about $1.6 billion and was generating about $300 million in NOI. Will RPT be receiving a slice of that NOI going forward, or how should we think about the earnings impact or accretion from that investment?

Michael Nierenberg, Chief Executive Officer, Rithm Capital and Rithm Property Trust: You should—I would think about it more as something that’s probably backended. It’s a pro rata share of what Rithm did on the balance sheet. So when you look at it, RPT has $50 million of the Paramount deal on its balance sheet, and it’ll be pro rata versus Rithm.

Craig Cucchiara, Analyst, Lucid Capital Markets: Okay, that’s helpful. And just thinking about the loans that you’re originating at Genesis, which I believe would be accretive to Rithm, relative to where you raised capital last year, are you exploring getting Rithm with more of those types of loans? And I guess when you talk about your future state on a larger capital base, is that sort of a wait for the common to kind of get closer to book value, or kind of where—what’s the path there?

Michael Nierenberg, Chief Executive Officer, Rithm Capital and Rithm Property Trust: So, Genesis, which I pointed out, is gonna do roughly $6 billion-$7 billion of production, you know, we expect this year. There’s obviously plenty of loans that go into both the Rithm balance sheet. Obviously, you know, if we’re successful around a capital raise for RPT, there’ll be loans that we’ve identified. So as I pointed out, there is no J-curve. You know, the loans would go right onto the balance sheet, and you’d see a real pop in earnings at the RPT level. We also source third party. I mean, we’re actually developing more and more channels around sourcing third-party loans in that very same space, whether it be a multifamily or in some of the very, you know, the kind of sponsored-type loans that Genesis does.

You know, the other thing I would point out there, you know, we have a funds business, obviously, and we have a, an either funds or SMAs with whether it be with sovereigns around the around the globe, or we also have a vehicle. We, we launched a fund on one of the wirehouses, that’s actually taking some of that product. So we have a number of different, capital vehicles that are actually acquiring, whether it be Genesis loans and/or similar type loans from other originators, and we expect that to continue. Regarding your question on the capital side, you know, Rithm sits with, you know, anywhere from typically $1.5 billion-$2.5 billion of cash and liquidity on balance sheet, at most times. Obviously, our stock is trading at a discount to book.

I don’t anticipate us issuing equity here. Unless there’s something that’s highly accretive for what we’re trying to do as an organization. So that would be my comment around the equity side.

Craig Cucchiara, Analyst, Lucid Capital Markets: Okay, that’s helpful. Thanks, guys.

Michael Nierenberg, Chief Executive Officer, Rithm Capital and Rithm Property Trust: Thank you.

Conference Operator: Your next question comes from the line of Henry Coffey with Wedbush. Please go ahead.

Henry Coffey, Analyst, Wedbush: Good morning, Michael. It’s good to be on the phone with you all.

Michael Nierenberg, Chief Executive Officer, Rithm Capital and Rithm Property Trust: Hey, man.

Henry Coffey, Analyst, Wedbush: So timing, I mean, I think that’s the only question at this point. Getting RPT over book value, that’s a big jump. Is there a tolerance for finding other sources of capital, be they preferred or common, that would allow you to move ahead with the recap plan? Or are we just gonna have to kind of wait?

Michael Nierenberg, Chief Executive Officer, Rithm Capital and Rithm Property Trust: I think, timing is a good one. I would respond to markets. So you say timing, I say markets. The answer is, the short answer is yes. I mean, there’s third-party capital that wants to be part of the vehicle. Is it possible at some point that we bring in third-party capital alongside the vehicle as it exists today? I think the short answer is yes. But, you know, while saying that, we’re not gonna leave this vehicle outstanding, trading as, you know, where it does for forever. So yeah, it’s a timing thing. We wanna make sure that, you know, we don’t wanna do something that’s highly dilutive. If you recall, last year, we did a pref in and around this. The company’s sitting with some cash and liquidity.

We also have what I would call liquid floaters on balance sheet. So to the extent that we found something more accretive, it’s likely that we would sell those down and then invest in something else. But it’s a timing thing, it’s a market thing, and it’s also, I would expect us to continue to add more third-party capital to our lives.

Henry Coffey, Analyst, Wedbush: And then basically, just to kind of reiterate, the primary source of loans is gonna be multifamily and what Genesis generates, mainly higher-yielding repositioning loans, or you’ll be doing some more traditional multifamily lending as well inside of RPT?

Michael Nierenberg, Chief Executive Officer, Rithm Capital and Rithm Property Trust: I think it’s. Right now, what we’ve identified as a pool of assets, I think it’s something around $1 billion of assets that would go right into the, right into the vehicle, obviously, subject to board approvals. And once that happened, you’d see an immediate pop in earnings. So that’s the way I would, I would view it. Could there be other types of loans? The answer is yes. But for now, you look at the Genesis loans from a levered perspective, they’re well north of 15%, and I think they’ll be highly accretive to what we’re doing in the vehicle.

Henry Coffey, Analyst, Wedbush: All right. Thank you very much. I look forward to moving forward with you on this.

Michael Nierenberg, Chief Executive Officer, Rithm Capital and Rithm Property Trust: Good to hear your voice, Henry. Have a good weekend.

Henry Coffey, Analyst, Wedbush: Thank you, sir.

Conference Operator: Again, if you would like to ask a question, press star one. And your next question comes from the line of Jason Stewart with Compass Point. Please go ahead.

Jason Stewart, Analyst, Compass Point: Hey, good morning. Thank you.

Michael Nierenberg, Chief Executive Officer, Rithm Capital and Rithm Property Trust: Hey, Jason.

Jason Stewart, Analyst, Compass Point: Interesting opportunity at Genesis. You know, obviously, Genesis is not a forced seller, and you do know the quality of the loans, you’re familiar with them. But could you talk about the pros and cons of buying from a Genesis versus, you know, a third party who might be more of a motivated or forced seller in the market?

Michael Nierenberg, Chief Executive Officer, Rithm Capital and Rithm Property Trust: We do both, is what I would say. The short answer is, the more we could do, the better. You know, based on our third-party fundraising, we have, I’m not gonna call it insatiable demand, but we have a tremendous amount of demand for this product, both in our funds business, on the Rithm balance sheet, because obviously, they’re higher coupon earners, as well as into the Rithm Property Trust. So it’s gonna be a combination of everything. We’ve already set up flow agreements with a number of originators. We are. The one thing I would point out is we’re extremely mindful of credit as we source product from other third parties. And one thing I like about our Genesis business is that, the gentleman who runs it, Clint Arrowsmith, as you’ve probably spoken with in the past, does a great job around credit.

His background, he comes from a bank as a credit officer. That’s really, really important. So while we could turn on the jets and grow origination, we got to be mindful of our credit box, and that’s something that we also have to think about as we source from third parties, because you see this in this business. Once things get . . . And I’m not singling anybody out, but once things get a little bit where this product is probably the most in demand from what I would call our LPs and what we wanna do on balance sheet, you just have to make sure you don’t have any missteps around the credit side, and, and that’s something that we’re extremely mindful of.

But the long-winded, my short answer to my long-winded explanation is, we are gonna source from third parties wherever we can, as long as we’re comfortable with the credit.

Jason Stewart, Analyst, Compass Point: Got it. Okay. And you mentioned banks. You know, I would have expected banks to have been sort of rate dislocated sellers in this market. Is that, is that something you’re seeing an opportunity to, to acquire, and especially since it’s multi, or is that opportunity passed?

Michael Nierenberg, Chief Executive Officer, Rithm Capital and Rithm Property Trust: You’re not, you’re not seeing a lot of bank selling, is what I would say. When I talk about the banks, we, you know, we launched a fund on one of the wirehouses, on the bank platform, and that’s, again, that’s creating more demand for the product that Genesis is making, and some of our non-QM products. So, I think the banks are probably, you know, better buyers. What you’ve seen from the banks, the regional banks pulling back, right? We’ve, we’ve seen that over the course of the past couple years, which has created this great opportunity for Genesis and some of our other lending businesses to grow production.

Jason Stewart, Analyst, Compass Point: Okay. Got it. One big picture question. You know, you mentioned the Fannie/Freddie licensing. Is the ultimate goal here to be able to go end-to-end, sort of from a intermediate loan to permanent financing through the GSEs? Is that the vision for RPT down the road, to have that license and create the customer relationship end to end?

Michael Nierenberg, Chief Executive Officer, Rithm Capital and Rithm Property Trust: Yeah, if we could do it, for sure. I mean, you know, when you, when you think about the power of the franchise, look at Genesis. Genesis could go and they can make a loan to a builder in, let’s just say, you know, in the build-to-rent space. The mortgage company, New Res, can then put a, you know, work in conjunction with Genesis and provide loans, for example, to those, to that community of, of builders. Or it could be in either a builder that’s buying, you know, building and selling on a, on a go-forward basis. So a, a lot of our thesis and what we’re trying to do across the board is, to be able to capture as much wallet as we can from, from our customer, customer base.

You look even at the mortgage company, which has over 4 million customers, are there other products that we could offer them that are gonna generate earnings for our shareholders? And we’re working on cards and other things that we hope to roll out here in the near future. So, you know, that is an example, but end-to-end is something that we’re trying to do for sure.

Jason Stewart, Analyst, Compass Point: Got it. Okay. Thanks, Michael. Appreciate it.

Michael Nierenberg, Chief Executive Officer, Rithm Capital and Rithm Property Trust: Thanks, Jason.

Conference Operator: There are no further questions at this time. I will now turn the call back over to Michael Nierenberg for closing remarks.

Michael Nierenberg, Chief Executive Officer, Rithm Capital and Rithm Property Trust: Have a great holiday weekend, everyone. Thanks for your support. Thanks for dialing in, and be safe. Speak to you soon.

Conference Operator: Ladies and gentlemen, that concludes today’s call. Thank you all for joining. You may now disconnect.