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    RPT
    Earnings call· Jun 2026(Q2 FY26)

    Rithm Property Trust Q2 FY26 earnings call RPT

    Jul 28, 2026 Source

    Executive summary

    Rhythm Property Trust Q2 FY26 — Strategic Crossroads Amidst Capital Constraints

    Rhythm Property Trust has successfully transformed its balance sheet and achieved break-even earnings, but its growth strategy is currently hampered by an inability to raise equity at an acceptable valuation. Management is actively exploring a range of strategic alternatives, including potential privatization or further capital deployment, to maximize shareholder value, with a decision expected by year-end.

    Highlights

    4

    • Improved liquidity and cleaned up the balance sheet, transforming the company from losing money to break-even.

    • Invested $117 million in multifamily transitional loans with a 9.1% gross WAC and an approximate 14% levered return.

    • Book value of $30.17 per share, remaining comparable to the prior quarter's $30.33.

    • Maintained a current dividend yield of 10% with a $0.36 per share dividend paid.

    Concerns

    3

    • An attempted equity offering was pulled due to stock performance and short selling, as the offering price would have been substantially below the trading price (e.g., $9 vs. $14).

    • The company needs to raise capital to grow earnings and deploy into new assets; if unsuccessful, alternative avenues like buybacks, M&A, or tendering for shares will be explored.

    • Remaining legacy assets (retained interests) totaling approximately $170 million are largely illiquid due to Dodd-Frank requirements and being out-of-the-money for calls.

    Operational metrics

    13
    Book Value per Share
    $30.17Comparable to $30.33 in prior quarter
    Q2 FY26

    book value is $30.17, which is comparable to where it was the quarter before, which I think was $30.33.

    Dividend per Share
    $0.36
    Q2 FY26

    dividend and then paid his 36 cents

    Dividend Yield
    10%
    Q2 FY26

    for a dividend yield of 10%.

    RTL and MTL Loans Purchased
    $117 million
    Q2 FY26

    117 million of RTL and MTL loans

    Gross Weighted Average Coupon (WAC)
    9.1%
    Q2 FY26

    9.1% gross WAC

    Levered Return
    14%
    Q2 FY26

    levered return of about 14%

    Advance Rate
    75%
    Q2 FY26

    Advance rate on the underlying assets are 75%

    Cost of Funds
    5.65%
    Q2 FY26

    cost of funds of about 565.

    Equity Remaining in Vehicle
    North of $50 million
    Q2 FY26

    there's something north of north of 50 million dollars I believe in common right now or I shouldn't say in common in in equity that remains in the vehicle.

    Potential Additional Loans from Genesis
    $200 million
    Near-term

    you could take down another $200 million of loans from Genesis.

    Equity Remaining in Legacy Assets
    ~$170 million
    Q2 FY26

    about 170 million after the last transaction.

    Cash and Liquidity
    $2.1 billion
    As of 6/30

    if you looked at the rhythm earnings today as at the end of 630, we had 2.1 billion in cash and liquidity.

    Equity Offering Price vs. Trading Price
    $9 vs. $14
    Q2 FY26

    We started when the stock was at 14 bucks. And a deal would have, to do a deal would have had to be south of $10.

    Industry KPIs

    1
    MetricValueDetails
    Investment volume closed$117 millionUSD

    Orderbook & backlog

    1
    Future Funding for Genesis Loans$111 millionQ2 FY26

    Represents future funding commitments for loans taken on this quarter.

    Deals & partnerships

    1
    Paramount / ElicorInvestment in a company, intended to support growth.

    The investment was made at a time when the company expected to raise capital for the vehicle. Management was 'extremely excited' about the investment, but it would not solve the fundamental need for capital.

    Risks & headwinds

    3
    Inability to raise equity capital at an acceptable valuationOngoing, second attempt in six months failed

    Equity offering would have been priced at approximately $9 per share, substantially below the $14 trading price. Rhythm was willing to backstop a $200 million offering.

    Mitigation: Exploring alternative avenues including buybacks, M&A, tendering for shares, or potential privatization; seeking real participation from others away from Rhythm.

    Stock performance and short selling impacting capital raisesQ2 FY26

    Stock was trading at $14, but an offering would have been priced south of $10, leading to the offering being pulled.

    Mitigation: Pulled the equity offering to protect shareholders; exploring strategic alternatives to enhance shareholder value.

    Illiquidity of legacy assets (retained interests)Ongoing; some assets may become callable in the fall

    Approximately $170 million in equity remains on the REGI side, primarily in retained interests that are held for Dodd-Frank purposes and are not callable or in the money.

    Mitigation: Assuming assets will sit for now; will re-evaluate callable assets in the fall.

    What to watch in Q3 FY26

    4

    Strategic Alternatives Decision

    By end of year (2026)
    CurrentActively exploring options (buybacks, M&A, tender for shares, privatization)
    TargetDecision made on the future direction of the vehicle

    Why it matters

    This decision will determine the future growth path or potential exit strategy for shareholders, fundamentally impacting the investment thesis.

    And our intent is to have all that stuff done by the end of the year, no later than the end of the year.

    Q&A highlights

    6

    What do 'explore opportunities to enhance shareholder value' entail, and why not conduct a formal strategic review like Apollo and KKR?

    Michael Nierenberg explained that their situation differs from Apollo's larger vehicle and KKR's less clean vehicle. He stated the goal is to create shareholder value, noting the book value is substantially higher than the trading price. He confirmed it will be a board decision on whether to clean up, tender for shares, or pursue M&A, acknowledging the difficulty in raising equity.

    “this will be a board decision as far as what, you know, the direction of what we do here, whether this thing gets cleaned up, whether we tender for shares, whether we try to do M&A deals, et cetera.”

    asked by Tom Catherwood · answered by Michael Nierenberg

    2 min read5 chapters

    Detailed Narrative

    01

    Strategic Evolution and Capital Needs

    Rhythm Property Trust has undergone a significant transformation since Rhythm Capital took over management, changing its name from Great Ajax and shifting its mission to become a dedicated commercial real estate vehicle. The company has improved its liquidity, cleaned up its balance sheet, and moved from a loss-making position to break-even. However, the path to further growth is currently constrained by the inability to raise new equity capital at a valuation deemed fair to existing shareholders.

    02

    Investment Strategy and Recent Deployments

    The company's investment strategy focuses on high-coupon, short-duration senior loans, specifically residential and multifamily transitional loans (RTL and MTL), originated by its affiliate Genesis Capital. In Q2 FY26, Rhythm Property Trust purchased $117 million of these loans, featuring a 9.1% gross weighted average coupon and an approximate 14% levered return. The advance rate on these underlying assets is 75%, with a cost of funds around 5.65%.

    03

    Unsuccessful Equity Offering and Valuation Concerns

    A recent attempt to raise equity in the public markets was withdrawn due to adverse stock performance and short selling. Management noted that the offering would have been priced substantially below the stock's trading value (e.g., $9 per share compared to a $14 trading price), which was deemed not in the best interest of shareholders. This marks the second unsuccessful equity raise attempt in the past six months.

    04

    Shareholder Value Enhancement and Strategic Alternatives

    Given the challenges in raising capital, management is actively exploring various strategic alternatives to maximize shareholder value. These options include potentially buying back equity, pursuing M&A opportunities, or tendering for the shares of the underlying company. The board will ultimately decide on the best path forward, with an intent to finalize these strategic decisions by the end of the year.

    05

    Balance Sheet and Liquidity Position

    Rhythm Property Trust maintains a clean balance sheet, differentiating it from many other mortgage REITs. After recent deployments, the vehicle has north of $50 million in remaining equity. Additionally, the parent company, Rhythm, reported $2.1 billion in cash and liquidity as of June 30, indicating strong financial backing, though the focus remains on attracting external capital for the Property Trust.

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