Rithm Capital Corp. Q4 FY2025 earnings call

Management Statement and Operational Highlights

• Acquisitions and Growth: Acquired Crestline and Paramount. Sculptor grew AUM, Genesis had record origination and earnings.
• Technology Investments: Announced partnerships with Valon and HomeVision for servicing and underwriting. Invested in tech stack and marketing to enhance customer experience.
• Dividends and Financials: Paid well north of $6 billion in dividends since 2013. 2025 earnings available for distribution was $2.35 per diluted share, a 12% year-over-year growth. Q4 EAD was $419 million, $0.74 per diluted share.
• Market Commentary: Addressed geopolitical risks, Agency MBS purchases, yield curve steepening expectations, and focus on commercial real estate recovery.

Segment Performance

• Genesis: In 2025, originated just under $5 billion in loans, with earnings up 250% from 2022 (when acquisition occurred, production was $1.7 billion). Contributes to asset management and lending segments.
• NewRez: Had year-over-year earnings growth of 13%. It is the 3rd largest mortgage servicer and 5th largest mortgage lender in the US. Servicing portfolio was $850 billion, funded volume in 2025 was $63 billion, with pretax income north of $1 billion.
• Asset Management (Sculptor, Crestline): Sculptor had gross inflows of $5.8 billion in 2025, AUM grew from $34 billion to $38 billion. Crestline acquisition closed in December 2025, with total AUM of $18 billion and 700 investors.
• Paramount: Acquired 13 large office buildings in NY and SF. Core assets had a leased occupancy of 86.9% at year-end 2025, and leased over 1.7 million square feet in core assets in 2025.

Guidance

• 2026 Outlook: Forecasted production growth, with origination volumes expected to vary with market conditions. Focus on non-agency origination and maintaining margins.
• Technology Impact: Expectations of Valon and HomeVision partnerships to improve efficiency and drive future earnings growth.
• Capital Raising: Exploring structures for Paramount capital raising, including funds, permanent capital, and JV partnerships.

Risks

• Market Volatility: Fluctuations in mortgage rates, yield curve movements, and potential impact on MSR mark-to-market.
• Competition: Intense competition in mortgage origination and servicing, potential for irrational pricing by competitors.
• Geopolitical and Regulatory: Impact of geopolitical events and regulatory changes on affordability and mortgage market dynamics.

Question and Answer

Q: Crispin Love on funded volumes, purchase vs refi, and Q1 expectations A: Baron Silverstein and Michael Nierenberg discussed refi volume increase due to market rally, forecasted 2026 production growth, and investments in marketing and technology to drive recapture.

Q: Bose George on gain on sale margins, competition, and wholesale volumes A: Baron Silverstein talked about mix impact, focus on non-agency origination, and maintaining margins while not chasing market share.

Q: Doug Harter on Paramount capital raising and timing A: Michael Nierenberg discussed fluidity in capital raising structures for Paramount, exploring funds, permanent capital, and JV partnerships.

Q: Giuliano Bologna on asset management scale and mortgage recapture A: Michael Nierenberg and Baron Silverstein spoke about growing asset management scale prudently and recapture as a key driver of margin stability.