Rithm Capital Corp. (RITM) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call highlights strong financial performance, with significant growth in NewRez's pretax income and funded volume, and a successful leasing activity at Paramount. The Q&A session reveals a strategic focus on maintaining margins and customer relationships, despite competitive pressures. The company's liquidity position and strategic acquisitions are also positive indicators. However, management's vague responses to some questions suggest potential uncertainties. Overall, the strong financial metrics and strategic growth plans outweigh these concerns, suggesting a positive stock price reaction.
Key Financial Performance
Earnings Available for Distribution (EAD) $2.35 per diluted share for 2025, representing a 12% year-over-year growth. This growth was attributed to the diversification of the platform and strong performance across various business segments.
Dividends Paid Over $600 million in dividends paid in 2025. Despite this payout, the book value year-over-year was higher.
Genesis Business Earnings Earnings were up 250% since the acquisition in 2022. The business produced just under $5 billion in loans in 2025, compared to $1.7 billion in 2022. This growth was driven by disciplined credit practices and increased originations.
NewRez Earnings Year-over-year earnings grew by 13% in 2025. Investments in technology and marketing, as well as leadership changes, contributed to this growth.
Sculptor Asset Management AUM Assets under management grew from $34 billion to $38 billion in 2025, with $5.8 billion in gross inflows. Growth was driven by strong performance and capital formation, especially in the real estate division.
Crestline Asset Management AUM AUM reached $18 billion in 2025. The acquisition added new capabilities in credit, insurance, and reinsurance, contributing to the firm's overall growth.
GAAP Net Income $567 million for 2025, with a return on equity of 8%. The Q4 GAAP net income was $53 million, with a 3% return on equity. The difference between Q4 and the full year was due to a conservative MSR mark.
Book Value Reported at $7 billion at the end of 2025, representing $12.66 per common share, which was approximately $0.10 higher than the previous year.
Cash and Liquidity $1.7 billion in cash and liquidity at the end of 2025, after funding all business operations and acquisitions.
NewRez Pretax Income Approximately $1.1 billion for 2025, a 17% increase year-over-year. The growth was driven by disciplined origination strategies and third-party servicing business.
NewRez Funded Volume $63 billion for 2025, with a 15% quarter-over-quarter increase in Q4. Non-agency production grew by 147% year-over-year, including a 200% increase in non-QM originations.
Paramount Leasing Activity Leased more than 1.7 million square feet in 2025, up 235% from 2024. The increase was driven by strong demand in New York and San Francisco markets.
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Operating Highlights
Genesis Business: Record year with $5 billion in loans originated, up from $1.7 billion in 2022. Earnings increased by 250% since acquisition in 2022.
NewRez Technology Investments: Announced partnerships with Valon Technologies and HomeVision to enhance servicing and underwriting systems, leveraging AI for efficiency.
NewRez Crypto Enhancement: Launched a new feature allowing cryptocurrency assets to be recognized for mortgage qualifications.
Paramount Acquisition: Acquired 13 Class A office buildings in New York and San Francisco at a 40% discount to pre-COVID values, making Rithm the fourth largest office owner in NYC.
San Francisco Market Recovery: Leased 411,000 square feet in 2025, up 330% year-over-year, driven by AI companies and venture capital funding.
Asset Management Growth: Assets under management grew to $100 billion, with $63 billion in third-party assets. Crestline acquisition added $20 billion in AUM.
Financial Performance: 2025 earnings available for distribution grew 12% year-over-year to $2.35 per diluted share. Paid over $600 million in dividends.
Expansion into Commercial Real Estate: Entered the office real estate market with the Paramount acquisition, focusing on dislocated sectors for growth.
Focus on Technology: Invested in AI-driven platforms like Valon and HomeVision to improve operational efficiency and customer experience.
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Risk or Challenges
Geopolitical Risks: The transcript mentions 'a lot of geopolitical risk everywhere in the system,' which could impact market stability and investment performance.
San Francisco Office Market Challenges: The San Francisco core portfolio's leased occupancy was only 62.2%, with large known move-outs and ongoing recovery challenges in the market.
Economic Uncertainty and Yield Curve: The company anticipates a steepening yield curve, which could impact borrowing costs and investment returns. Additionally, economic uncertainties are highlighted as a concern.
Regulatory and Policy Risks: The administration's focus on affordability and GSEs purchasing Agency MBS could influence market dynamics and the company's operations.
Commercial Real Estate Dislocation: The acquisition of Paramount Group involves significant exposure to dislocated office markets in New York and San Francisco, which carry risks related to occupancy rates and market recovery.
Technology Investments and Execution Risks: The company is heavily investing in technology partnerships like Valon and HomeVision, which carry execution risks and potential delays in realizing efficiency gains.
Credit and Origination Risks: The Genesis business emphasizes credit discipline, but there is a risk of delinquency trends and credit quality issues in the origination business.
Market Competition in Mortgage Origination: The mortgage origination business faces competitive pressures, with the company emphasizing pricing discipline and avoiding market share battles.
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Guidance & Outlook
Revenue Expectations: The company expects more mortgage production due to lower mortgage rates relative to treasury yields. This is anticipated to generate higher levels of amortization and origination gains.
Market Trends: The yield curve is expected to steepen, with the company positioned to benefit from this trend. The return to office trend is gaining momentum, particularly in New York and San Francisco, with increasing leasing activity and tenant demand.
Business Segment Performance: The Genesis business is expected to expand its multifamily and residential transitional loan origination. NewRez plans to grow its non-agency production and has introduced a new crypto enhancement for mortgage qualifications. The company anticipates significant growth in its ABF space, which is in high demand among LPs.
Capital Expenditures and Investments: The company is investing in technology partnerships, such as Valon Technologies and HomeVision, to enhance efficiency and servicing capabilities. It is also focusing on adding market-leading amenities to its office properties to attract tenants.
Strategic Plans: The company plans to grow its asset management business prudently, focusing on areas like infrastructure and ABF. It aims to leverage its expertise in credit, real estate, and multi-strategy investing to expand its offerings.
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Shareholder Return Plan
Dividends Paid: Paid out north of $600 million in dividends for the year 2025.
Historical Dividends: Since the company's formation in 2013, over $6 billion in dividends have been paid out.
Dividend Consistency: Earnings available for distribution have exceeded the common dividend paid for 25 consecutive quarters.
Dividend Yield: Common stock dividend yield was approximately 9.2% at the end of 2025.
Quarterly Dividend: Paid $0.25 per share per quarter, totaling $1 per share annually.
Share Repurchase Program: No specific share repurchase program was mentioned in the transcript.
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Key Q&A
Q:Can you detail the funded volumes, particularly the high percentage of refi, and expectations for the first quarter?
A:The high percentage of refi (40%+) reflects market trends, including a rally in late summer and September. Refis increased due to market conditions and internal efforts to connect with homeowners and improve services. Expectations for Q1 include a 10% increase in production, supported by investments in marketing, AI, and talent.
Q:What is your view on competition in the mortgage space, especially regarding gain on sale margins?
A:The mortgage space is competitive, but the company focuses on maintaining customer relationships through refi and recapture rather than chasing origination growth. Gain on sale margins have held well due to a conservative approach and leveraging the breadth of the company.
Q:What drove the improvement in gain on sale margin in the retail channel in Q4 compared to Q3?
A:The improvement was driven by a mix shift, with correspondent share decreasing from 70% to 62% and increased production in consumer direct channels. Timing of completion accrual and MSR recapture also contributed to the margin increase.
Q:How did competition in the wholesale market impact your performance, given the increase in volumes and margins?
A:The company focused on non-agency products, maintaining discipline on margins and avoiding aggressive pricing in conventional or government products. This strategy allowed for meaningful growth in volumes and margins in the wholesale market.
Q:How does the REIT structure affect capital allocation plans, and would shedding REIT status change this?
A:The company is focused on growing its asset management business and may transition to a C-Corp in the future. This would not change the focus on driving higher earnings for shareholders and LPs. The REIT structure will evolve over time, potentially leading to a separately listed asset management business.
Q:Are there opportunities to apply the playbook used for Paramount to other strategies?
A:Yes, the company plans to use a similar approach with Rithm Property Trust, originating more multifamily loans and raising capital to grow the balance sheet. This strategy aims to replicate past successes in building permanent capital vehicles.
Q:What is the update on capital raising for Paramount, and how does it affect timing and structure?
A:The process is fluid, with no rush to finalize a structure. Options include fundraises, permanent capital raises, and JV partnerships. The company has $1.7 billion in cash and liquidity, allowing flexibility in timing and structure.
Q:Is there a scale or profitability target for transitioning to a C-Corp?
A:There is no specific target, but the focus is on meeting market expectations and achieving a valuation comparable to top asset managers. The transition is expected within the next year, depending on market conditions.
Q:Will recapture in the consumer direct channel continue to drive stability in gain on sale margins?
A:Yes, recapture is expected to remain a key driver of stability, supported by efforts to connect with customers and leverage the platform's scale.
Q:Are recapture expectations in servicing transfers or the correspondent channel too high?
A:The company cannot comment on others' expectations but believes technology and efficiency improvements will enhance recapture rates. The focus remains on maintaining customer relationships and avoiding uneconomical practices.
Q:Review of Unclear Management Responses
A:Management avoided directly addressing whether mortgage players are being irrational, stating it is a competitive business without commenting on specific behaviors. Additionally, the response to recapture expectations in servicing transfers was vague, emphasizing market efficiency without providing specific insights.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Asset
Class office
Francisco San
HomeVision
MSR portfolio
New Residential
New York
NewRez
Paramount
San Francisco
York San
amenity
asset class
core portfolio
deal foot
diversification
division
estate space
leader
lease term
leasing activity
mortgage lender
name
note
occupancy share
office building
portfolio occupancy
quarter
recovery
servicing system
tenant market
term year
world class
RITM Transcript
Rithm Capital Corp. (RITM) Q4 2025 Earnings Call Transcript
Positive2-3
The earnings call highlights strong financial performance, with significant growth in NewRez's pretax income and funded volume, and a successful leasing activity at Paramount. The Q&A session reveals a strategic focus on maintaining margins and customer relationships, despite competitive pressures. The company's liquidity position and strategic acquisitions are also positive indicators. However, management's vague responses to some questions suggest potential uncertainties. Overall, the strong financial metrics and strategic growth plans outweigh these concerns, suggesting a positive stock price reaction.
Rithm Capital Corp. (RITM) Q3 2025 Earnings Call Transcript
Unknown10-30
The earnings call summary presents a mixed picture. Positive factors include strong growth in Genesis Capital EBITDA, direct origination, and non-agency assets. However, the Q&A reveals uncertainties about strategic actions and capital raising, with management avoiding specifics. The lack of dividend increase and share buybacks, despite recent growth, further tempers optimism. These factors combined with the absence of concrete guidance adjustments lead to a neutral sentiment.
Rithm Capital Corp. (RITM) Q2 2025 Earnings Call Transcript
Positive7-28
The earnings call reveals strong financial performance, with significant growth in Newrez originations and pretax income, as well as strategic expansions in asset management and non-QM markets. The Q&A highlights management's focus on growth and efficiency, though some responses lacked clarity. Positive factors include strong earnings, optimistic guidance, and potential new partnerships, outweighing concerns about vague responses, leading to a positive sentiment prediction.
Rithm Capital Corp. (NYSE:RITM) Q1 2025 Earnings Call Transcript
Positive4-26
The earnings call summary reveals strong financial metrics, including a significant earnings growth and a robust dividend yield. The Q&A section indicates a positive outlook, with active M&A pipeline and opportunities in subservicing and securitization markets. However, competitive pressures and regulatory issues pose risks. The stock is undervalued, trading at 83% of book value, suggesting potential for price appreciation. Overall, the positive aspects, including strong earnings, optimistic guidance, and shareholder returns, outweigh the negatives, leading to a positive sentiment rating.
RITM Slides
RITM Report
Frequently Asked Questions
Where does this earnings call transcript come from?
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Why do some answers appear as “Unclear” or “Inaudible”?
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They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
