Rithm Property Trust Inc. (NYSE: RPT) experienced a notable after-hours decline Monday, with its stock down 6.9% following the announcement that the company has initiated a public offering of its common stock. The offering was disclosed after the market close and triggered immediate investor reaction in extended trading.
Structure of the offering and underwriting
The company has granted the underwriters a 30-day option to acquire up to an additional 15% of the shares sold in the offering to cover potential over-allotments. The banks serving as book-running managers for the transaction are Goldman Sachs & Co. LLC, RBC Capital Markets, LLC, UBS Investment Bank, Wells Fargo Securities, LLC, BTIG, LLC, Keefe, Bruyette & Woods, Inc., and Piper Sandler & Co.
Concurrent private placement with Rithm Capital affiliate
An affiliate of Rithm Capital Corp. (NYSE: RITM) - which is affiliated with the manager of Rithm Property Trust - has indicated interest in buying shares of the company’s common stock and potentially a new class of non-voting convertible preferred stock in a private placement that would run at the same per-share price as the public offering. The private placement is conditioned on the closing of the public offering and is expected to close promptly after the public offering closes.
Use of proceeds
Rithm Property Trust stated that net proceeds from the public offering and the concurrent private placement, together with available cash and borrowings under its master repurchase facility, will be used to acquire a portfolio of multifamily residential transition loans from affiliates of Rithm Capital. The company also plans to apply funds to other investments and for general corporate purposes.
Company description
Rithm Property Trust operates as an opportunistic commercial real estate investment platform that is externally managed by an affiliate of Rithm Capital Corp. The company is organized as a Maryland corporation and is treated as a real estate investment trust - or REIT - for federal income tax purposes.
Market reaction and context
The immediate market response was a 6.9% decline in Rithm Property Trust shares in after-hours trading Monday. The announced capital raise and the mechanics described above - including the underwriter option and the linked private placement - were the proximate facts cited in the company notice that preceded the after-hours move.