• Permanent Capital: $7.8 billion.
• Assets Under Management (AUM): $80 billion combined for Rithm and Sculptor.
• Balance Sheet: $45 billion for Rithm.
• Full Year GAAP Net Income: $835 million or $1.67 per diluted share.
• Return on Equity (Full Year): 14%.
• Earnings Available for Distribution (Full Year): $1,050 million or $2.10 per diluted share.
• Dividend Yield: 9.2%, with $1 paid per common share annually.
• Fourth Quarter GAAP Net Income: $263 million or $0.50 per diluted share.
• Return on Equity (Q4): 16%.
• Earnings Available for Distribution (Q4): $316 million or $0.60 per diluted share.
• Book Value: $12.56 per share, unchanged from the prior year.
• Genesis Capital Origination: $3.6 billion in 2024.
• Genesis Capital EBITDA: Approximately $100 million.
• Newrez Pretax Income (Q4): Approximately $280 million, 20% ROE.
• Newrez Full Year Pretax Income: Approximately $1 billion, 19% ROE.
• Total Servicing Portfolio: $844 billion.
• Funded Volume (2024): $59 billion.
• Origination Margins (Q4): 131 basis points, up 8 basis points quarter over quarter.
• Origination PTI (Q4): $96 million, up 19% from last quarter.
• Owned MSRs: $525 billion directly serviced by Newrez.

• Warning! GuruFocus has detected 4 Warning Signs with RITM.

Release Date: February 06, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Rithm Capital Corp (NYSE:RITM) reported a strong fourth quarter and full year 2024, with significant earnings growth and a robust balance sheet.
• The company has successfully expanded its asset management business, notably through the acquisition of Sculptor, which has shown excellent performance.
• Rithm Capital Corp (NYSE:RITM) has a diversified product offering across various asset classes, including real estate and credit, which positions it well for future growth.
• The company is planning to launch a global energy infrastructure platform, which could provide new growth opportunities.
• Newrez, a subsidiary of Rithm Capital Corp (NYSE:RITM), delivered strong financial performance with significant growth in servicing and origination volumes.

Negative Points

• Rithm Capital Corp (NYSE:RITM) acknowledges that its equity is undervalued, trading below its perceived intrinsic value.
• The company is still evaluating changes to its capital structure, which could impact its operations and shareholder value.
• There is uncertainty regarding the potential listing of Newrez, with no definitive timeline provided.
• The company faces competitive pressures in the non-QM and home equity loan markets, which could impact its market share.
• Rithm Capital Corp (NYSE:RITM) is operating in a challenging macroeconomic environment with elevated interest rates and affordability issues affecting the housing market.

Q & A Highlights

Q: Could you give us any updated thoughts on the potential listing of Newrez in 2025? And could you also tie that into your comments about potential changes in the capital structure at Rithm? A: Michael Nierenberg, Chairman, CEO, and President of Rithm Capital, stated that they are not ready to list Newrez yet. They have taken steps to have separate segment reporting for clarity. The focus is on growing the REIT and potentially having a C Corp structure with operating companies below. The M&A pipeline is robust, and while they aim for changes in 2025, the timeline is uncertain.

Q: What assets do you find attractive for scaling up the REIT, and how would you look to scale it up? A: Michael Nierenberg explained that they plan to continue focusing on the mortgage company and MSR business, which have been beneficial. They see growth in non-QM assets and Genesis Capital's offerings. The strategy involves leveraging existing strengths and expanding third-party servicing.

Q: Can you provide more detail on the initiatives to grow the credit business at Sculptor and expectations for fundraising this year? A: Michael Nierenberg emphasized that performance will drive AUM growth. The team is actively engaging with LPs, and while M&A is an option, they are cautious about valuations. They expect a good year for fundraising, particularly in real estate and credit, though they are not at the scale of larger firms like Blackstone or Apollo.

Q: Is there any value in pushing assets into the Rithm Property Trust structure, or would you prefer creating separate vehicles over time? A: Michael Nierenberg prefers not to transfer assets between REITs. They are considering transactions where both Rithm and Rithm Property Trust could participate separately. The focus is on creating more vehicles and exploring new verticals, such as energy infrastructure, with third-party capital commitments.

Q: How do you plan to continue driving market share growth in the non-QM and home equity space amid increasing competition? A: Baron Silverstein, President of Newrez, highlighted investments in the team, technology, and brand as key initiatives. They focus on maximizing opportunities within their existing portfolio and are making significant platform investments to support growth.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.