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    RITM
    Earnings call· Mar 2026(Q1 FY26)

    Rithm Capital Q1 FY26 earnings call RITM

    Apr 28, 2026 Source

    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

    6
    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

    4
    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%——

    Operational metrics

    12
    Cash and liquidity
    $1.3 billion
    Q1 FY26 end

    Total cash and liquidity at the end of the quarter.

    GAAP Net Income
    $57.8 million
    Q1 FY26

    GAAP net income for the quarter, noted as noisy due to hedges.

    Book Value
    $7 billiongrown quarter-over-quarter net-net
    Q1 FY26 end

    Total book value and per share at quarter end, showing growth net of dividends.

    Dividend Yield
    10.5%
    Q1 FY26

    Annualized dividend yield.

    Dividend per common share
    $0.25
    Q1 FY26

    Cash dividend paid per common share.

    Corporate credit and ABF investments deployed
    over $2 billion
    Q1 FY26

    Capital deployed in corporate credit and asset-backed finance investments.

    Sculptor Real Estate Fund V commitment
    $1 billion
    Q1 FY26

    Commitment made to Sculptor Real Estate Fund V.

    Non-QM securitizations
    $2 billion
    Q1 FY26

    Total non-QM securitizations completed during the quarter.

    Invested in mortgage assets
    $3 billion
    Q1 FY26

    Investments made in various mortgage assets.

    Home improvement loans purchased
    $140 million
    Q1 FY26

    Home improvement loans purchased under the flow agreement with Upgrade.

    Depreciation
    $87 million
    Q1 FY26

    Depreciation for the quarter, expected to decrease after the sell-down of the indoor portfolio.

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

    Number of homes in the single-family rental business being sold down to retail.

    Industry KPIs

    5
    MetricValueDetails
    Occupancy rate85.7%%
    Investment volume closed$3 billionUSD
    Leasing bookings volume signedmore than 360,000square feet
    Lease renewal spread re leasing recapture14.9%%
    Third party strategic capital fund jv platform$4.6 billionUSD

    Orderbook & backlog

    1
    Single-family rental homes remaining for salea couple of thousand homesQ1 FY26

    Being sold down to retail

    Deals & partnerships

    5
    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.

    BlackstoneExisting 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.

    BeaconExisting 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 namedCMBS 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 namedRefinancing of 31 West 52nd Street

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

    Capital programs

    1
    Elior Properties Growth-focused Capital Improvement Strategyunderway

    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

    5
    Market competition pressure on mortgage gain on sale marginsQ1 FY26

    margins were contained within our historical 4-quarter range

    Mitigation: maintain pricing discipline, did not chase market share

    Consumer sentiment and inflation concernsCurrent

    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 marketCurrent

    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 concernsCurrent

    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 BDCsCurrent

    20% of the BDCs have software exposure

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

    What to watch in Q2 FY26

    5

    NewRez AI-driven efficiency benefits

    second half of the year
    Currentinitial product launch is ahead of schedule
    Targetfirst 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.

    Q&A highlights

    6

    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 read6 chapters

    Detailed Narrative

    01

    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.

    02

    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.

    03

    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.

    04

    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.

    05

    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%.

    06

    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

    AI-generated summary of the company’s earnings call. Not investment advice.