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Rithm Capital (RITM) Q1 FY26 earnings call: guidance and Q&A

Earnings call· Mar 2026 (Q1 FY26)· Real Estate· Apr 28, 2026

Source: earnings call transcript

Executive summary

Rithm Capital Q1 FY26 — Strong Performance Across Diversified Businesses

Rithm Capital delivered a solid first quarter, leveraging its diversified platform across asset management, mortgage, and real estate. The company capitalized on market dislocations in credit and ABF, while its mortgage and real estate segments showed strong operational performance and efficiency gains. Management emphasized performance-driven AUM growth and strategic simplification to enhance shareholder value.

Highlights

5

  • Reported $0.51 per diluted share, achieving a 17% return on equity.

  • Genesis Capital had its best quarter in history, originating $1.6 billion in loans, significantly up from $1.7 billion for the entire year in 2022.

  • NewRez generated $274 million of pretax income (excluding mark-to-market) with a 19% annualized operating ROE.

  • Elior Properties (formerly Paramount) portfolio is 85.7% leased at share, with New York City at 92.1% leased, up 470 basis points year-over-year.

  • Sculptor recorded gross inflows of $600 million, ending the quarter with $37 billion in AUM, and Crestline grew management fee revenue by 16% year-over-year.

Concerns

4

  • Market competition continues to pressure gain on sale margins in mortgage origination, though margins were contained within historical range.

  • Consumer sentiment is noted as "a little bit nervous" due to inflation, with concerns about the cost of living.

  • Proposed regulatory changes impacting the build-to-rent space have led to approximately $3.4 billion of commitments being put on hold, causing the SFR market to be at a standstill.

  • Headline risk in private credit markets, particularly concerning retail-driven evergreen funds and potential liquidity issues, was discussed as a sentiment-driven dislocation.

Guidance & targets

CategoryTargetConfidence
Genesis Capital production
$6.5 billion-$7 billion
medium materiality
High
Genesis Capital EBITDA
$150 million-$175 million
medium materiality
High
NewRez cost per loan reduction
additional 15% reduction
medium materiality
High
NewRez annual expense savings from Valin transition
in excess of $65 million
medium materiality
High
Elior Properties annual management company EBITDA increase
approximately $40 million
medium materiality
High
Elior Properties rent growth and occupancy gains
significant rent growth and occupancy gains
medium materiality
Medium

Segment performance

SegmentRevenueYoYQoQMargin
Elior Properties
Elior Properties, formerly Paramount, is focused on operating Class A real estate in New York and San Francisco. The team has identified significant operating efficiencies since the acquisition and is executing a capital improvement strategy to drive future growth.
Portfolio size: 10 core assets totaling 9.9 million square feetPortfolio leased occupancy: 85.7% at shareAverage in-place rent: $90 per square foot at shareWeighted average lease term: 8.4 years at shareYear-to-date leasing (executed/pending): >360,000 square feetWeighted average initial rent (YTD leasing): $94.64 per square footAcquisition basis: $585 per square footNew York core portfolio leased occupancy: 92.1% at shareNew York core portfolio leased occupancy YoY change: Up 470 basis pointsInitial rents in New York (YTD): 4.2% higher compared to 2025San Francisco core portfolio leased occupancy: 59.1% at shareSan Francisco YTD leasing (executed/pending): ~280,000 square feet
———Identified operating efficiencies to increase annual management company EBITDA by approximately $40 million
NewRez Mortgage Company
NewRez delivered a strong quarter driven by disciplined origination, higher servicing fees, and effective management of interest rate volatility. The company continues to expand its market share and is focused on leveraging technology and AI to enhance operational efficiencies and reduce costs.
Servicing portfolio: ~$850 billionFunded volume: $15.5 billionOrigination market share growth: 8x since inceptionServicing market share growth: 6x since inceptionDirect origination channels share: 37% in Q1 FY26Direct origination channels share YoY growth: 75%Cost per loan: Almost half of industry averageNew third-party servicing clients: 5New third-party servicing loan boarding: $22 billion
———$274 million pretax income (excluding mark-to-market), 19% annualized operating ROE
Genesis Capital
Genesis Capital achieved a record quarter for loan originations, significantly increasing its production since acquisition. The business is strategically growing its multifamily origination segment and maintains a tight credit box to ensure strong credit performance despite market uncertainties.
Total loans originated (Q1): $1.6 billionNew sponsors added: 118Multifamily origination share: 35%-40%Delinquency numbers: 3%Expected production (FY26): $6.5 billion-$7 billion
———Expected $150 million-$175 million EBITDA for FY26
Asset Management (Sculptor & Crestline)
The asset management division, comprising Sculptor and Crestline, continues to grow its AUM and management fee revenue. The firm emphasizes performance-driven growth and is well-positioned to capitalize on market dislocations in the credit space, with strong investment performance across its strategies.
Total AUM (firm-wide): ~$60 billionSculptor AUM: $37 billionSculptor gross inflows (Q1): $600 millionCrestline AUM: <$20 billionCrestline Capital Solutions net performance since '22: 13.5%Crestline Direct Lending net performance since '23: 12%Crestline software exposure: 7% of invested assets
Crestline management fee revenue grew 16% YoY16%——

RITM operating KPIs by quarter

RITM operating KPIs stated on its earnings calls, by fiscal quarter
KPIThis call Mar 2026 Q1 FY26 Jun 2026 Q2 FY26Change vs prior quarter
Properties Elicor
10 Elior's portfolio consists of 10 core assets totaling 9.9 million square feet. Source: earnings call transcript
10 Our portfolio consists of 10 core assets totaling 9.9 million square feet, approximately 7 million square feet of which are in New York and the balance in San Francisco. Source: earnings call transcript
0%
Square feet Elicor
9.9M sq ft Elior's portfolio consists of 10 core assets totaling 9.9 million square feet. Source: earnings call transcript
9.9M sq ft Our portfolio consists of 10 core assets totaling 9.9 million square feet, approximately 7 million square feet of which are in New York and the balance in San Francisco. Source: earnings call transcript
0%
Leased rate Elicor
85.7% The core portfolio is currently 85.7% leased at share with an average in-place rent of $90 per square foot at share and a weighted average lease term of 8.4 years at share. Source: earnings call transcript
86.5% The core portfolio is currently 86.5% leased with an average in-place rent of $90 per square foot and a weighted average lease term of 8.3 years. Source: earnings call transcript
+0.8 pt

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Orderbook & backlog

Single-family rental homes remaining for sale a couple of thousand homes Q1 FY26

Being sold down to retail

Deals & partnerships

Not named (potential JV partner) Launched a JV process on 1301 Avenue of the Americas

Elior Properties launched a JV process on 1301 Avenue of the Americas, a 100% leased Class A asset in Midtown.

Blackstone Existing JV relationship on One Market Plaza in San Francisco

Elior Properties has an existing JV relationship with Blackstone on One Market Plaza in San Francisco.

Beacon Existing JV relationship on One Front Street in San Francisco

Elior Properties has an existing JV relationship with Beacon on One Front Street in San Francisco.

Not named CMBS financing on 1325 Avenue of the Americas

Subsequent to quarter end, Elior Properties closed a CMBS financing on 1325 Avenue of the Americas on a cash-neutral basis.

Not named Refinancing of 31 West 52nd Street

Elior Properties is engaged on the refinancing of 31 West 52nd Street.

Capital programs

Elior Properties Growth-focused Capital Improvement Strategy underway

Benefit:significant rent growth and occupancy gains

Strategy includes repositioning and amortization of 4 key assets (2 in New York, 2 in San Francisco) to drive rent growth and occupancy. Specific improvements include transforming lobbies, adding amenity spaces, conferencing centers, fitness facilities, bars, restaurants, and modernizing elevators at 1633 Broadway, 712 Fifth Avenue, One Market Plaza, and One Front Street.

Risks & headwinds

Market competition pressure on mortgage gain on sale margins Q1 FY26

margins were contained within our historical 4-quarter range

Mitigation:maintain pricing discipline, did not chase market share

Consumer sentiment and inflation concerns Current

consumer sentiment, I'm a little bit nervous. I mean you go out and you buy a sandwich, it's $15.

Mitigation:Implied careful underwriting and focus on credit quality in lending businesses.

Regulatory impact on build-to-rent and SFR market Current

roughly $3.4 billion of commitments that are on hold

Mitigation:Hope that the administration will peel back some of those thoughts; Genesis Capital shifting to multifamily origination.

Private credit market noise and liquidity concerns Current

noise in the private credit markets, a lot of that has been driven by retail

Mitigation:Rithm's low exposure to retail-distributed products; focus on institutional partners; view that it's a sentiment-driven dislocation creating opportunity.

Software exposure in BDCs Current

20% of the BDCs have software exposure

Mitigation:Crestline's software exposure is only 7% of invested assets.

What to watch in Q2 FY26

NewRez AI-driven efficiency benefits

second half of the year
Current initial product launch is ahead of schedule
Target first codeveloped tools being implemented by the end of this quarter

Why it matters

Expected to drive significant operating leverage and cost reduction for the mortgage business.

Our partnership with HomeVision is ahead of schedule with our first codeveloped tools being implemented by the end of this quarter.

Find out whether RITM delivers this. Inve re-checks your case every morning.

Q&A highlights

Can you discuss the fundraising momentum for Sculptor and Crestline, what you're seeing from institutions, and how you view the noise in the private credit market, especially regarding retail and BDCs?

Michael Nierenberg highlighted Sculptor's successful $4.6 billion real estate fundraise and plans for new ABF funds, emphasizing performance-driven AUM growth. He stated that credit performance across Sculptor and Crestline is strong with no deterioration. He differentiated institutional demand from retail-driven liquidity concerns in private credit, noting Rithm's low retail exposure and viewing current dislocations as opportunities, not systemic risk. He also mentioned Crestline's low 7% software exposure in invested assets.

“I would say, armored and upward, and the business feels really, really good to us. There is noise that's going to create opportunity because when you think about the credit markets and you have a 5-year treasury, for example, at 4%, the high-yield index is 3.25%, 350 unlevered returns in that business are now 7.5%. Debt looks very, very attractive to us.”

asked by Crispin Love · answered by Michael Nierenberg

2 min read 6 chapters

Detailed narrative

Diversified Business Model

Rithm Capital operates five core businesses: Sculptor and Crestline (asset management), Elior (real estate), NewRez (mortgage), and Genesis Capital (residential transitional lending). This diversification allows the firm to capitalize on various market opportunities and dislocations, with approximately $60 billion managed for third parties and a $50 billion balance sheet. The company emphasizes its ability to deploy capital across ABF and credit spaces, particularly during market dislocations.

Asset Management Growth and Strategy

The asset management division, comprising Sculptor and Crestline, is a key growth driver. Sculptor ended the quarter with $37 billion in AUM, including $600 million in gross inflows, while Crestline grew management fee revenue by 16% year-over-year. The firm is actively raising new funds, particularly in the ABF space, leveraging its strong track record and institutional partnerships. Management stressed leading with performance over AUM growth and sees significant opportunities in the credit markets.

Elior Properties Rebranding and Performance

Paramount Group was rebranded to Elior Properties, signifying a renewed commitment to Class A real estate in New York and San Francisco. The portfolio is 85.7% leased at share, with New York at 92.1% leased (up 470 bps YoY). The team identified approximately $40 million in annual management company EBITDA savings since the acquisition and is executing a growth-focused capital improvement strategy on four key assets to drive future rent growth and occupancy gains.

NewRez Mortgage Company Operational Efficiency

NewRez generated $274 million in pretax income (excluding mark-to-market) with a 19% annualized operating ROE. The company continues to grow its market share, now ranking as the third-largest servicer and fifth-largest originator. A key focus is on technology adoption, including AI, to drive efficiency, with an expected additional 15% reduction in cost per loan and over $65 million in annual expense savings from the Valin operating system transition.

Genesis Capital Record Quarter and Strategic Shift

Genesis Capital achieved its best quarter in history, originating $1.6 billion in loans, a substantial increase from $1.7 billion for the entire year in 2022. The business is expected to generate $150 million to $175 million in EBITDA for FY26. Genesis is strategically shifting towards more multifamily origination, which currently accounts for 35%-40% of its business, while maintaining a tight credit box and a low delinquency rate of 3%.

Market Opportunities in Credit and ABF

Michael Nierenberg highlighted significant opportunities in credit and asset-backed finance (ABF) due to current market dislocations. He noted strong demand for ABS products and believes the firm is well-positioned to capitalize on these trends as other market participants pull back. Despite some

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.