Rithm Property Trust, Inc. Q2 FY2025 earnings call

• Took over management of the REIT 1 year ago, renamed to Rithm Property Trust, sold legacy non-accretive assets, and repositioned as an opportunistic commercial real estate REIT.
• Deployed $300 million in commercial real estate assets over the past year, raised capital via pref offering without diluting shareholders.
• Pipeline of ~$2 billion in real estate investments as of end-June, including senior mortgages, subordinate loans, mezzanine loans, and other opportunistic investments.
• Q2 GAAP income was $1.4 million or $0.03 per diluted share, compared to Q2 '24 loss of $0.35 per diluted share.
• Aim to be an opportunistic commercial REIT, with focus on retail, multifamily, office, and industrial sectors. Target ROEs of 15%-20% and target yields of ~15% for the portfolio.

In the second quarter, GAAP income was $1.4 million or $0.03 per diluted share. EAD was about $100,000. The second quarter common stock dividend was $0.06 per common share. Cash and cash equivalents were approximately $98.6 million. Total equity was $2.95 million. GAAP book value was $5.37, with the stock trading around $2.70, representing a ~50% discount to book. The real estate portfolio was $300 million, and there was approximately $100 million of cash and liquidity.

• Expect to deploy about $50 million of equity in Q3 with double-digit returns, assuming deals close.
• Plan to bring in third-party partners for larger transactions to avoid diluting shareholders.
• Aim to maintain the current dividend and continue to grow earnings through scaling the business via larger opportunities.

• Forward-looking statements made during the call may differ materially from actual results.
• Risks associated with real estate market dislocations, continuous debt maturities, and changes in capital structures affecting asset valuations.
• Risks detailed in annual and quarterly reports filed with the SEC regarding various operational and market-related uncertainties.

Q: In terms of the near-term opportunities in the pipeline, could you talk about how that splits up between the different sectors, loans, securities, et cetera?

A: Most of the portfolio is floating rate on the real estate side, with a focus on AAA CMBS. Pipeline includes retail assets in Seattle (anchored by Albertsons, Staples, etc.), multifamily, office, and larger M&A opportunities.

Q: When we think about the go-forward plan for the portfolio, what should we think about in terms of capital being put to work per quarter and where we may see that capital be putting to work?

A: Capital will be deployed in retail, multifamily, office, industrial, and via SRT deals with bank counterparties. Expect to deploy ~$50 million in equity in Q3, sitting on ~$100 million cash and liquidity, and plan to bring in third-party partners for larger deals.

Q: What's kind of changed between 1Q and 2Q that's helped that pipeline scale the way it has?

A: The team is having more conversations with sponsors, banking partners, and the Rithm Property Trust brand is getting out there. Prudent capital deployment with teens type returns in mind, not competing for last dollar on non-sensical deals.

Q: Hoping you could just talk about kind of trying to square all the things you've said about a growing pipeline, lack of interest in diluting shareholders. And just how you think about kind of the patience that you have to try to scale the business while kind of looking at those 2 factors and kind of how you think that plays out?

A: Scale will come via larger transactions, bringing in third-party capital alongside them. Pipelines are robust with 11 different transactions, ranging from large M&A to retail, multifamily, office. Will be patient and prudent in deploying capital.