Rithm Capital achieves $300 million earnings, announces strategic acquisitions, and maintains robust liquidity in Q3 2025, enhancing growth outlook.

OPERATOR - (00:01:50)

Good morning and welcome to the Rithm Capital third quarter 2025 earnings call. All participants will be in listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touchtone phone. To withdraw your question, please press star and then two. Please note this event is being recorded. I would now like to turn the conference over to Emma Halkey, Associate General Counsel. Please go ahead.

Emma Halkey - Associate General Counsel - (00:02:30)

Thank you and good morning everyone. I would like to thank you for joining us today for Rithm Capital's third quarter 2025 earnings call. Joining me today are Michael Nirenberg, Chairman, CEO and President of Rithm Capital, Nick Santoro, Chief Financial Officer of Rithm Capital and Baron Silverstein, President of Nuurez. Throughout the call we are going to reference the earnings supplement that was posted this morning to the Rithm Capital website, www.rhythmcap.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. 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 and with that I will turn the call over to Michael.

Michael - (00:03:34)

Thanks Emma. Good morning everyone and thanks for joining the call this morning. Our company had a great quarter with all of our business lines performing extremely well. Our market leading business lines that enabled us to get here Nuurez, our mortgage company which is one of the largest mortgage companies in the U.S. genesis, our construction lender which is one of the largest non bank construction lenders in the US and our investment portfolio and team all had a really good quarter. As we look at all the business lines that we built or acquired, this enabled us to generate approximately $300 million in earnings for our shareholders, generating an 18% ROE. We ended the quarter with $2.2 billion of cash and liquidity. During the quarter we announced two acquisitions. Crestline, which is a credit manager based out of Fort Worth, Texas and Paramount which is a large real estate office REIT here based in New York City with properties in two of the gateway cities in the U.S. both New York and San Francisco. So we are clear we will not be raising equity in the capital markets to fund these acquisitions. We will fund these acquisitions with a combination of balance sheet and third party LPs and partners. The capital created by these business lines help us expand our platform. When we see an opportunity to acquire a company or an asset that helps expand our product offerings to our LPs, we try and take advantage of these types of situations. We are really excited with these acquisitions. Crestline is an 18-20 billion dollars asset manager with great people, great investment professionals offering direct lending, nav lending, credit products. They also have an insurance business and a reinsurance business. So now we're in the insurance business. The suite of products that we have across our firm at Rhythm and our subsidiaries enable us to offer a wide spectrum of credit and ABF products to our LP base and quite frankly put us on the stage to be able to compete against anyone. Our mantra of performance first will enable us to grow our platforms. We are not, to be clear, in an AUM race. More importantly, what we want to do is lead with results. When we meet with LPs, they want fewer managers with more products and I believe we are in the middle of accomplishing that. During the quarter, as I mentioned, we also announced the acquisition of Paramount. Paramount is a Class A office REIT with a great portfolio of office buildings in New York and San Francisco. There's 13 properties there. We are seeing huge demand for office in both New York City and the recovery in San Francisco has already begun. Acquiring assets for a little under 600 per foot versus replacement costs of 2,500 to 3,000 a foot gets us really excited. In New York, this portfolio is north of 90% leased and in San Francisco it's in the low 70s, creating a huge opportunity for us to grow Noi. When you look at the Paramount portfolio, not only will we grow occupancy, we also believe in the ability to drive rents higher as the average rent is approximately $85 per foot. For example, when we think about the need for office space, Rhythm and our affiliates have a need for 100,000 of new space. It's very, very difficult to find space and average rents are well above the $85 per foot that I quoted in most markets for a quality office space during the quarter. Paramount released their earnings last night and I believe there's a couple other REITs that released earnings. We're seeing some of the highest leasing activity that we've seen and this goes back to the pre Covid days as it relates to Paramount. They have an excellent team of professionals who have been running the company for many, many years. And as well as the operations, I believe there's approximately 300 people between corporate and ops. We're very excited to work with the team creating what we believe will be a terrific investment return for our LPs and shareholders. So as we look forward, our mission is still the same. Put up solid results quarter after quarter, be able to offer more products for our LPs and partners and take advantage of opportunistic situations to generate outsized returns and grow the company. I'll now refer to our supplement which has been posted online and I'm going to begin on page three. You look in the upper part of the page. Rhythm by the Numbers balance sheet 47 billion. Sculptor has 37 billion of AUM, Crestline has 18 billion of AUM and Paramount has a $7 billion portfolio. So when we think about this, we think about it in the context of having a little north of $100 billion in investable assets. And between the investment teams that work on our balance sheet, as well as putting up great results for our LPs, we're really excited of where we sit today and where we're going. When you think about Rhythm, very few companies have $8.5 billion of permanent capital. We're proud of that. We've grown this company in the public markets. When we began this company back in 2013 at Fortress, the average investment team or the average age of the investment team, not age but been working in the investment business has been 31 years. When you look at the bottom part of the you can see all the portfolio companies. Nuurez again we're one of the top five mortgage companies in the US. Sculptor has been around for 30 plus years. Great track record. The real estate team is just coming off a very successful capital raise raising north of 4 billion for their business. Their brand is second to none in the real estate business. Crestline. Super excited to work together and help support that organization. Paramount. I mentioned on the real estate side, Genesis Capital just to give you on that one. We bought that company from Goldman Sachs in 2022. At that time it was doing a billion 8 of production. This year I think we're going to either approach or do north of 5 billion of production. And EBITDA numbers have gone from 40 odd million to 120 this year expected. And then we have Rithm Property Trust which was the broken REIT we took over last year which was known as Great Ajax. We we're still trying to figure out a way, quite frankly, to grow that and put the right assets there. As we look at financial highlights on page four. A really good quarter and it's solid. You know, all of our business lines contributing here. Earnings available for distribution, $0.54 per diluted share. This is the 24th consecutive quarter where EAD was greater than our dividends paid. GAAP net income 193.7 or $0.35 per diluted share for return on equity of 11%. Keep in mind that includes all the mark to market stuff. Earnings available for distribution again, $297 million. $0.54 per diluted share, or 18% return on equity book value. We closed the quarter at $12.83, which is $7.1 billion dividend 25 cents. And as I pointed out before, cash and liquidity on balance sheet, $2.2 billion. As you look at page 5, quarter in review once again, we demonstrated steady growth year over year in all of our segments during the quarter. As I mentioned earlier, we entered into a definitive agreement to acquire Crestline on September 3rd. We're hoping that deal closes on December 1st. We entered into a definitive agreement to acquire Paramount on September 17th. That'll go out for shareholder vote and we're hopeful that closes in mid December. These acquisitions continue, as I pointed out before, to expand the product offerings that we have to. You know, when we sit down with an LP, we have a larger suite of products because LPs want fewer managers. And now with between Sculptor, Rhythm, Crestline and some of the real estate stuff we're doing, we have a large amount of products that we could offer to our different clients. Fundraising across the platform. We continue to work hard to build that during the quarter in Q4, we expect to close our first Evergreen ABF fund on a leading wealth management platform. And then when you look at inflows, Sculptor continues to see some good inflows into their business. Bottom part of the page. Genesis Capital during The quarter originated 1.2 billion of loans. That's a 60% increase year over year. We saw 71 new sponsors in what I would say on that company, Credit first is the mantra. It's not again, just to grow, but credit first really matters. The mortgage company Barron will take us through the mortgage company, but Barron and the team continue to do a great job there. And as the world changes and we think about AI and innovation, we're doing all we can to stay ahead of that. And then on the investment portfolio during the quarter, we agreed on a forward flow to acquire up to a billion dollars in home improvement loans. That's from Upgrade. We did a securitization for a little under 500 million on non QM and we invested $2.6 billion in non QM loans and residential transition loans. And that's through our Genesis brand. When you look at the. . When you look. When you look at the our AM and A update, what we wanted to do is put a so you could have a sense for a liquidity walk. As I mentioned, cash and liquidity as of the end of Q3 is $2.2 billion. Here it shows. What are we showing here? One point. Sorry. Why don't you take us through? Sure. So at the end of the quarter we ended with cash and cash equivalents on balance sheet of 1.6 billion. Then just rolling it forward, we have the Crestline acquisition and the Paramount acquisition. The amounts shown here are the expected cash outlays or uses at close net of excess cash on the respective balance sheets of both Crestline and Paramount. Then we have our use of cash which comes from our source of cash, which comes from drawing down on our financing facilities. The expectation is at close we will have approximately 1 billion of financing available to us, bringing us down to 1.3 billion of cash and cash equivalents post both the Crestline and Paramount transactions. And that 1.2 billion is well north of our regulatory requirements as well as working capital and what we hold for margin requirements. Thanks, Nick. On page seven, as we look at the. You know, again, this is something that we talk about quarter after quarter, the valuation of our of our company. We try to show the sum of the parts. You know, when you look to the top part of the page, you know, Rhythm gets valued similar to mortgage REIT peers. We think there's a huge amount of upside for us to be able to unlock value that is going to be driven by our asset management business as well as by the mortgage company. If you look at most mortgage companies today or if you look at what I would call our peer group, they trade anywhere from one and a half to three times. Right now, rhythm as a public company is trading. Call it something around upper 0.8 to 0.9 times. If you think about the mortgage company getting valued properly, you think about the asset management business even trading at 10 times. The following slide on page 8 will show you a range of outcomes which we believe we will achieve over time of something between $16 and $23. As we compare ourselves either to different asset management firms or when we look at the valuation of our mortgage company in our Genesis business. With that I'm going to now flip to page 10, which is the so called power of our platform. As we pointed out before, a little north of $100 billion in assets. You can see all the different product offerings that we have right now to show out to our LPs and clients in corporate credit. There's really nothing more that we need. When we look at corporate credit. We will be exploring over time the energy space, obviously very important space right now. There's nothing for us to do there at Sculptor. There's the Multi Strat Fund. Our real estate business continues to grow and ABF is something that is near and dear to our heart and that's something that we think is going to be extremely scalable for us as an organization across all of our business lines. As I mentioned earlier, we expect to close one of our first ABF funds here in the fourth quarter and that's on one of the large wealth platforms. And then we have a couple other things that we're working there. Page 11 crestline just gives you a quick snapshot of of that business again. 18 billion of AUM acquired in September, was founded in 97. Headquartered in Fort Worth. Offices in New York, Toronto, London and Tokyo. Really great brand. The team there led by Doug Braddon and Keith Williams do a fabulous job. They have a great nav lending business, a great direct lending business. They're really good on the credit side and we think from a firm standpoint on the capability between Crestline, Sculptor, Rhythm, you know, the DNA of the firm and what we have to offer should put us really in a very, very good position with our LPs. From an employee standpoint, there's 175 employees. Average experience of the management team is 20 plus years and there's 700 plus investors across all the strategies on page 12 just gives you a couple snapshot on the different funds that we have to offer or that Crestline has to offer the investment professionals associated with them. You know the thing I mentioned in my opening remarks, we are now in the insurance and reinsurance business. That is a business that we intend to grow over time. Obviously very, very competitive. But now that we have a licensed entity, we're super excited about where we could go with that. Page 13, sculptor. This is her snapshot that we put in each quarter. Results have been great. Team is doing great. Real estate guys and gals recently raised north of 4 billion in their latest fund. Very well received brand there in the markets with Again, great results and leading with performance first rather than just AUM growth. Page 15. We talk about the Paramount deal. The rationale for us here is pretty simple. One is I think we're really good at developing a thesis or a theory around an investment strategy in a dislocated market. If we start with that, then when you have a board that announces a process to sell a company, that usually the way that we believe or we think about it, it creates an opportunity for us to have a hard look at that company. When you look at the job that the Paramount team has done and the portfolio of assets that they have assembled, our belief is the so called return to office. And you could actually poke holes at that a little bit because when you look at New York, it's 90 plus percent leased up. So you could say, okay, that office, New York has already returned to office. I mentioned here that between Rhythm and our affiliates, we need 100,000ft. It's really, really hard to find good office at any kind of what I would call reasonable value. So we think about that. San Fran is in the middle of the so called AI boom. You're seeing you have a new mayor there, you have a lot of folks coming back to the office. That portfolio is about low 70s. From a lease up perspective, we think we're going to be able to put in some amenities, put in some ti dollars and we're going to see some really good lease ups there. And we're seeing that now across all of our other leasing activity. When you look at San Francisco, the demand for tenants right now is roughly 7.8 million square feet, which is the highest ever, you know, that we know of. So really excited about this. Buying assets that we think attractive or acquiring a company at an attractive value with great assets and being able to raise third party capital around that, around that grow asset management business is really where we want to go with this. Page 16. Just a snapshot of the balance sheet pro forma after we do these transactions. You can have a look at that. I'm not going to spend time on that again. That's on page 16. And now let's touch base on Genesis and then I'll turn it over to Baron who will talk about Nuurez on Genesis. As I mentioned, 1.2 billion. A record third quarter for the business. New originations yielding roughly 10% at funding 71 new sponsors. When you look at the company, year over year, our outstanding commitments have grown by 51% year over year. In the third quarter, funded volume up 60%, sponsor growth up a little less than 50%. And from a delinquency perspective as I mentioned earlier, credit first total portfolio as only 4% that are 60 plus days. Just keep in mind we do service our own assets. I think that is a huge edge whether it be an ABF or anything else that we do. And for the most part there we're able to control an outcome and work with borrowers where we have some brand recognition. When you look at page 19 we just talk about a differentiated model versus so called other peers in the business. Between construction, bridge and renovation. The business is led by Clint Arrowsmith and Clint is, you know his background is really a bank credit guy and he's and Clint and Joe and the team have done a great job there. So real excited about where we sit. I'm going to turn it over to Baron now who's going to talk about the mortgage company and then we'll open it up for Q and A. Okay, thank you Michael. Good morning to everybody. Just Turning to slide 21.