Rithm Capital Corp. 2026 Q3 Earnings Call

Emma, please go ahead. Thank you, and good morning, everyone.

I would like to thank you for joining us today for Rithm Capital's third quarter 2026 earnings call. Joining me today are Michael Nierenberg, Chairman, CEO, and President of Rithm Capital, Nick Santoro, Chief Financial Officer of Rithm Capital, Baron Silverstein, President of NewRez, and Peter Brindley, Head of Real Estate at Elecor Properties. Throughout the call, we are going to reference the earnings supplement that was posted this morning to the Rithm Capital website, www.rithmcap.com. If you have not already done so, I would encourage you to download the presentation now. I would like to point out that certain statements made today will be forward-looking statements. 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.

Thanks, Emma. Good morning, everyone. Thanks for joining our call this morning. This quarter, we demonstrated the power of the platform and the risk discipline we bring to our investors and partners despite a very challenging environment. If you take a step back and look at the quarter, all indices related to markets we invest in were wider. Interest rates rose significantly. Geopolitical concerns persist. Oil rose, and we still had a great quarter. Our operating business lines, NewRez, Genesis, performed really well. Scale matters in those businesses, and with our MSR business at approximately $880 billion of MSRs at NewRez and Genesis clicking on all cylinders, we sit in a very good position in the marketplace. AI initiatives and expense management will help us drive higher earnings in the future, and I firmly believe AI will change the archaic nature of the mortgage industry.

Our real estate business in Rithm and our asset management business should be a very good growth area for us going forward. Our Elecor investment, which was formerly known as Paramount, where we took the company private and invest in New York City and San Francisco office, is an area we are very excited about. We are seeing significant leasing activity, growing rents, and brought in a partner on 1301 6th Avenue. As with most assets, entry point matters, and buying off a 75% discount to replacement value should reward our shareholders well. The Crestline real estate business is world-class and with an amazing track record. They continue to see more inflows into all of their differentiated strategies, as well as their recent fundraise, which was approximately $5.5 billion. Our asset management business is seeing real inflows.

We are launching new funds and did a first close on our new ABF fund. We now have multiple funds in the marketplace, including partnerships with the large banks on the distribution side. Investing in our clients, people, and products is essential to our success. I will say when we set out to launch our asset management business in 2022, upon our separation from Fortress, we were running around the globe making connections and developing relationships with investors everywhere. Today, we stand at 60-plus billion in third-party AUM. We have well north of 200 different partners and LPs, and I feel like we have just begun. Our mantra of performance first and making sure we have the expertise in the products we offer our clients is the backbone of our business. We need to differentiate ourselves from others, and we will.

I have never been more excited about the trajectory of our firm and the collaboration that is happening. Really exciting times for us and our partners. This quarter, we changed our presentation a bit, and we speak a little bit to the Rithm journey and where we are going. Please have a look. I will now refer to the presentation that has been posted online. I will begin on page 3. So when you look at Rithm today, it is roughly $110 billion of investable assets. That includes both the balance sheet and third-party assets that we manage on behalf of others. When you look to the left side of the page, Newrez is the third-largest mortgage servicer in the United States. I pointed out earlier that we have approximately $880 billion in mortgage servicing rights. We originate roughly $60 billion in mortgages.

Just something there, we do not need to originate a mortgage to make money. If the economics are there, we will do it. If not, the business performs extremely well and makes a lot of money. Genesis, the number 2 residential transition lender in the country, doing a lot more today in both RTLs as well as in multifamily, and we serve well north of 700 sponsors. Elecor Properties, as I mentioned before, was the company we took private. That was formerly known as Paramount, and Peter Brindley, who is with me here today, who runs real estate there, will speak to that in a minute. When you look to the right side of the page, our AUM north of $60 billion.

I pointed out when we first started this journey in 2022 to raise money from third parties, we were running around everywhere, and now we have well north of $60 billion of real AUM, multiple funds in the marketplace, a great brand, and most importantly, great teams that manage the money on behalf of our partners in the marketplace. When you look across, there's north of 30 years of performance across all of our different strategies. The other thing that I think will differentiate us as we go forward in the future is we do invest our own capital along folks that invest in our funds. When you look at the quarter on page 4, very strong quarter. Third quarter EAD of $0.55 per diluted share, 28 consecutive quarters where our EAD was greater than dividends paid.

Cumulative dividends paid just a little bit south of $7 billion at $6.8 billion. Earnings available for distribution in the quarter, again, $315 million. GAAP net income, $217 million, or $0.38 per diluted share. When you look at book value for the quarter, $7 billion. We're actually a little bit higher quarter-over-quarter. A lot of that's due to, honestly, our hedging activities as well as our MSR business, which in a higher rate environment is going to perform extremely well. Our common stock dividend, 11.2%, $0.25 per diluted share, and cash and liquidity, we ended the quarter at $1.9 billion. Page 5, if you look at the Rithm story, and then certain slides I'll take you through, but I'll take you through real quick on this one.

We started this company in 2013, to take advantage of opportunistic investing in, at that time, mortgage servicing rights because the banks needed to sell them due to Basel III capital rules as it related to the amount of capital that they needed to hold on balance sheet. Over the years, we focused on broadening our internal capabilities through acquisitions while working with our private equity business at Fortress, which owned, at that time, Mr. Cooper, and we also had built OneMain Financial at that time. In 2018, when it was clear that we were going to sell these portfolio companies because they sat in our private equity business, we decided to build our own. So we acquired a company called New Penn Financial, and that was the beginning of Newrez. Today, again, Newrez is one of the top mortgage companies in the U.S.

2022, we buy back the management contract from Fortress, and we rebrand the company as Rithm Capital. It was formerly known as New Residential. Over the years, we said, "Okay, let's go broaden our asset management business." 2023, we buy Sculptor, 2025, we buy Crestline, and again, we take Paramount private in 2025 as well. So that's really the beginning as far as how we got to the place that we did on the asset management side. When you look at our origination businesses at both Newrez and at Genesis, it truly differentiates our product offerings in the ABF space.

We not only have the ability to underwrite a borrower, we have the ability to service that borrower and whether those underlying loans go into funds or whether they sit on balance sheets, it is a factor that will differentiate us from others in the marketplace because we don't have to just go out and bid in competition against everybody else to buy a certain asset class. As I pointed out before, we have north of 200 institutional investors globally and well north of $61 billion in AUM. So where are we going on a forward basis? Our origination businesses will continue to be the core of our earnings at the public company level. We're going to continue to try to scale our asset management business, which we're really excited about.