Rithm Capital Aktie

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Deputy General Counsel; Emma, go ahead.

Thank you, and good morning, everyone. I would like to thank you for joining us today for Rithm Capital's Third Quarter 2026 Earnings Call. Joining me today are Michael Nierenberg, Chairman, CEO and President of Rithm Capital; Nick Santoro, Chief Financial Officer of Rithm Capital; Baron Silverstein, President of Newrez; and Peter Brindley, Head of Real Estate at Elecor Properties.

Throughout the call, we are going to reference the earnings supplement that was posted this morning to the Rhythm Capital website, www.rithmcap.com. If you've not already done so, I'd encourage you to tell the presentation now. I would like to point out that certain statements made today will be forward-looking statements. These statements, by their nature, are uncertain and may differ materially from actual results.

I encourage you to review the disclaimers in our press release and earnings supplement regarding forward-looking statements and to review the risk factors contained in our annual and quarterly reports filed with the SEC. In addition, we will be discussing some non-GAAP financial measures during today's call. Reconciliations of these measures to the most directly comparable GAAP measures can be found in our earnings supplement.

With that, I will turn the call over to Michael.

Thanks, Emma. Good morning, everyone. Thanks for joining our call this morning. This quarter, we demonstrated the power of the platform and the risk discipline we bring to our investors and partners despite a very challenging environment. If you take a step back and look at the quarter, all indices related to markets we invest in were wider. Interest rates rose significantly, geopolitical concerns persist, oil rose, and we still had a great quarter.

Our operating business lines, Newrez, Genesis performed really well. Scale matters in those businesses and with our MSR business, at approximately $880 billion of MSRs at Newrez and Genesis clicking on all cylinders, we sit in a very good position in the marketplace.

AI initiatives and expense management will help us drive higher earnings in the future, and I firmly believe AI will change the archaic nature of the mortgage industry. Our real estate business in Rithm and our Asset Management business should be a very good growth area for us going forward. Our Elecor investment, which was formerly known as Paramount, which -- where we took the company private and invested in New York City and San Francisco office is an area we're very excited about. We are seeing significant leasing activity, growing rents and brought in a partner on 1301 Sixth Avenue. As with most assets, entry point matters and buying off a 75% discount to replacement value should reward our shareholders well.

The scope to real estate business is world-class and with an amazing track record. They continue to see more inflows into all of their differentiated strategies as well as their recent fundraise, which was approximately $5.5 billion. Our asset management business is seeing real inflows. We are launching new funds and did a first close on our new ABF fund. We now have multiple funds in the marketplace, including partnerships with a large bank on the distribution side, investing in our clients, people and products is essential to our success.

I will say when we set out to launch our asset management business in 2022 upon our separation from Fortress, we were running around the globe, making connections and developing relationships with investors everywhere. Today, we stand at $60-plus billion of third-party AUM. We have well north of 200 different partners in LPs, and I feel like we've just begun.

Our mantra of Performance First and making sure we have the expertise in the products we offer our clients is the backbone of our business. We need to differentiate ourselves from others, and we will. I've never been more excited about the trajectory of our firm and the collaboration that is happening, really exciting times for us and our partners.

This quarter, we changed our presentation a bit and we speak a little bit to the Rithm journey and where we're going. Please have a look. I'll now refer to the presentation that's been posted online, and I will begin on Page 3.

So when you look at Rithm today, it's roughly $110 billion of investable assets that includes both the balance sheet and third-party assets that we manage on behalf of -- that we manage on behalf of others. When you look to the left side of the page, Newrez is the third largest mortgage servicer in the United States. I pointed out earlier that we have approximately $800 billion -- $880 billion of mortgage servicing rights, to something -- and we originate roughly $60 billion in mortgages. To something there, we don't need to originate a mortgage to make money. If the economics are there, we'll do it. If not, the business performs extremely well and makes a lot of money.

Genesis, the #2 residential transition lender in the country doing a lot more today in both RTLs as well as in multifamily, and we serve well north of 700 sponsors. Elecor Properties, as I mentioned before, was the company we took private. That was the formerly known as Paramount; and Peter Brindley, who's with me here today, who runs real estate there, we'll speak to that in a minute.

When you look to the right side of the page, our AUM north of $60 billion. I pointed out when we first started this journey in '22 to raise money from third parties, we were running around everywhere and now we have well north of $60 billion of real AUM multiple funds in the marketplace, a great brand and most importantly, great teams that manage the money on behalf of our partners in the marketplace.

When you look across this north of 30 years of performance across all of our different strategies. The other thing that I think will differentiate us as we go forward in the future is we do invest our own capital along folks that invest in our funds.

When you look at the quarter on Page 4, very strong quarter. Third quarter EAD of $0.55 per diluted share, 28 consecutive quarters where our EAD was greater than dividends paid, cumulative dividends paid just a little bit south of $7 billion at $6.8 billion. Earnings available for distribution in the quarter, again, $315 million; GAAP net income $217 million or $0.38 per diluted share.

When you look at book value for the quarter, $7 billion, we're actually a little bit higher quarter-over-quarter. A lot of that is due to, honestly, our hedging activities as well as our MSR business, which in a high rate environment is going to perform extremely well.

Our common stock dividend 11.2%, $0.25 per diluted share, and cash and liquidity, we ended the quarter at $1.9 billion.

Page 5, if you look at the Rithm story and then certain slides I'll take you through, but I'll take you through real quick on this one. We started this company in 2013 to take advantage of opportunistic investing in at that time, mortgage servicing rights because the banks needed to sell them due to bottle 3 capital rules as they related to the amount of capital that they needed to hold on balance sheet.

Over the years, we focused on broadening our internal capabilities through acquisitions while working with our private equity business at Fortress, which owned at that time, Mr. Cooper, and we also had built one main financial at that time. In 2018, when it was clear that we were going to sell these portfolio companies because they said in our private equity business, we decided to build our own. So we acquired a company called New Penn Financial, and that was the beginning of Newrez. Today, again, Newrez is one of the top mortgage companies in the United States.

2022, we buy back the management contract from Fortress, and we rebrand the company as Rithm Capital. It was formerly known as New Residential. Over the years, we said, "Okay, let's go broaden our asset management business." 2023, we buy Sculptor. 2025, we buy Crestline. And again, we take Paramount Private in 2025 as well. So that's really the beginning as far as how we got to the place that we did on the asset management side.

When you look at our origination businesses at both Newrez and at Genesis, we are -- it truly differentiates our product offerings in the ABS space. We not only have the ability to underwrite a borrower, we have the ability to service that borrower and whether those underlying loans go into funds or whether they sit on balance sheet, it is a factor that will differentiate us from others in the marketplace because we don't have to just go out and bid in competition against everybody else to buy a certain asset class.

And as I pointed out before, we have north of 200 institutional investors globally and well north of $61 billion in AUM.

So where are we going? Where we're going on a forward basis? Our origination businesses will continue to be the core of our earnings at the public company level. We're going to continue to try to scale our asset management business, which we're really excited about. As asset management earnings scale, we have the potential to optimize our corporate structure and actually have that as its own segment, but we need to continue to grow our so-called FRE or fee related earnings in order to do that.

When you look at Page 6, the quarter end review. Asset Management, I pointed out, we're starting to see real momentum in some of the new funds we have in the marketplace. During the quarter, we raised $569 million of new capital, and we're starting to see real commitment as it looks -- as we look to the fourth quarter for fund inflows. Year-to-date gross inflows are a little bit south of $3 billion.

Fee paid in AUM is about 76% of our total AUM, and that is a key to developing the platform into a more durable earnings stream.

Crestline held their final close on a European Capital Solutions Fund and bringing total commitments there to $625 million. And again, we continue to see healthy inflows into our business post the end of the quarter.

When we look at our core areas, Elecor, expanded its third-party capital base to a JV with a strategic partner for 1301 Sixth Avenue, while also signing 320,000 square feet of new leases in the quarter. Genesis originated $1.5 billion in RTL originations in the quarter, bringing year-to-date originations of $5 billion and exceeding all of what we did in 2025. And also Newrez originated when you look from a year-to-date perspective, $5.1 billion of non-agency loans, mostly in the non-QM space. It's a new record for Newrez in the product class. I bring that up, as I pointed out in my opening remarks, we don't need to originate a loan to be competitive with someone else for the sake of doing it.

This is an area where we're using our origination business, we use our funds business, we use our balance sheet to originate products where we're going to make more money for both our shareholders and our clients.

When you look at -- from a leverage perspective, we continue to leverage technology and investments in AI to achieve additional efficiencies. We expect to drive going forward, $125 million in savings for Newrez. I pointed out in prior quarters, we own roughly 9.9% of a software company called Valon. Valon is going to be our new servicing technology that will come online in the -- should come online at the end of Q1 in '27.

Our continued focus on expense discipline will help drive consistent sustainable earnings growth. And we look in the quarter, Newrez delivered a 24% operating ROE, showcasing the strong performance in a challenging environment.

When you look about our resilience across markets, Newrez is $879 -- or $880 billion of servicing, we'll continue to reward shareholders extremely well as we go forward -- with a very strong earnings stream, strong credit at Genesis compared to the rest of the industry, and then we remain extremely vigilant on our interest rate management across the board.

Page 7, really just talks again to the sum of the parts valuation. I'm not going to take you through this. The bottom line here is we think our equity is extremely cheap. We trade at a discount to book. When you look at our book value of, give or take, [ $12.5 ] the stock will likely open up higher this morning, but we still trade way too cheap on a relative basis, and we continue to evaluate ways to get our share price up.

In the Asset Management segment, have a look at Page 9, 200 institutional investors, 16 global offices. The products that we offer, and I pointed this out again in my opening remarks. We must have expertise in any fund or product that we offer to the market. The way that I think about our business, we are everything in credit, we are everything in real estate, we are everything in the multi-strat business. Our ABF franchise should be significantly bigger. And sometimes we think about -- we always think about what's next, and it's likely going to be something in infrastructure as we go forward. It is extremely scalable and the TAM in that marketplace is massive.

Page 19, the asset management business. I'm not going to hit the same bullet that I did. If you look to the bottom part of the page, the performance numbers, I think, stand -- they stand out relative to the pack. You look at some of the Crestline numbers. You look at Scope on the multi-strat side, which has been around forever. And again, very, very excited about where we're going in that business.

Page 11, the asset management business as we continue to scale. Again, a lot of these numbers will repeat. A couple of things I do want to point out where I think we go organically. When you look at our organic growth initiatives, we expect to deliver AUM of about $75 billion to $80 billion by the end of 2028. We continue to look at opportunities to grow our asset management business in the M&A world. And again, like I say always, we need to lead with performance.

On the commercial real estate side, I'll have one bullet here, just talking about opportunistic investing. We had bought 2 years ago in office building just outside Washington DC that we monetized in the third quarter. Again, these are examples of how we think about buying assets at the right times. This asset was located in Boston, Virginia. I think we paid $26 million or $27 million for it. We sold it with a $50-something million handle, 30% IRR, 1.6 -- And when you look across the rhythm side on the balance sheet, third quarter realizations from an IRR perspective, 43%, 1.6 mic across 3 different transactions.

The other thing is when you look at capital markets and our financing business, we closed on 31 West 52nd Street on a $500-plus million transaction, and we continue to focus on selective of our refinancing.

With that, I'll turn it over to Peter, who will take you through Elecor.

Thanks, Michael, and good morning. And turning to Page 14. We had a great quarter at Elecor Properties, and we continue to execute on our business plan. The third quarter was largely defined by strong leasing results, the refinancing of 31 West 52nd Street. The new joint venture agreement at 1301 Avenue of the Americas, the advancement of our significant amenity plans and continued operational excellence across the portfolio.

Year-to-date, we have executed leases and have leases pending on approximately 1 million square feet across our New York and San Francisco core portfolio with a weighted average initial rent of approximately $100 per square foot, 22% higher at share than the weighted average initial rent for our 2025 transactions.

Year-to-date, approximately 77% of our leasing activity in New York and San Francisco has occurred on vacant space and space scheduled to expire in 2026, and the balance has served to derisk lease roll in 2027 and beyond. Our pipeline remains robust and our lease expiration profile was manageable with approximately 2% at share expiring per annum in 2027 and 2028, paving the way for occupancy gains in our portfolio going forward.

Turning to Page 15, our markets and our portfolio. In New York, Midtown's leasing fundamentals continue to strengthen, particularly in well-located, well-amenitized Class A buildings. Looking at the broader Midtown market, the third quarter marked the 12th consecutive quarter of leasing activity outpaced the 5-year quarterly average.

Net absorption in Midtown remained positive for the ninth consecutive quarter, the longest run on record, resulting in the ongoing reduction of availability, particularly in Midtown's core submarkets. We continue to gain momentum and expect robust demand, coupled with the ongoing absorption of quality space in Midtown to support significantly improved deal economics moving forward. We believe we are well positioned to capitalize on current tenant demand in Midtown as we execute on our growth-focused business plan.

At quarter end, our New York core portfolio's leased occupancy was 88.6% at share. Year-to-date, initial rents in our New York portfolio of approximately $110 per square foot on leases signed and leases pending are approximately 36% higher as compared to our 2025 transactions.

Our third quarter was highlighted by the 113,000 square foot renewal and expansion of a financial institution at 1301 Avenue of the Americas, a building that is currently 100% leased.

Turning to San Francisco. Market-wide leasing activity in the third quarter was 2.7 million square feet, bringing the year-to-date total to approximately 9.7 million square feet on pace to be the strongest year-end total since 2018. San Francisco-based companies have raised a historic $270 billion of venture capital this year, mainly benefiting AI companies, which have contributed 36.5% leasing velocity year-to-date. This is further reinforcing San Francisco as the world's leading hub for AI innovation and has powered San Francisco to its fifth consecutive quarter of positive absorption.

At quarter end, our San Francisco core portfolio leased occupancy was 65% at share, up 590 basis points since Q1 2026. Approximately 65% of the 1 million square feet of leasing year-to-date has occurred in San Francisco, 96% of which has occurred with companies that are new to our portfolio.

Our third quarter was largely defined by a 76,000 square foot lease with a Fortune 100 entertainment company, and the 119,000 square foot lease with an AI-powered health care company, two of San Francisco's top 10 deals during the third quarter.

As previously mentioned, planning is underway to deliver exceptional amenities at both One Market Plaza and One Front Street, which has already begun to generate buzz in the market and will support our growth-focused strategy in San Francisco going forward.

We remain focused on further developing our tenant relationships, delivering market-leading hospitality, securing renewals for upcoming lease expirations and filling our vacant spaces. Finally, we believe our capital improvement strategy will drive significant rent growth and occupancy gains in 2026 and beyond. We are moving quickly to execute our key objectives and look forward to updating you on our progress.

Thanks, Peter. I'm going to take the Genesis section, which begins on Page 17, and then Baron will wrap up with -- and talk about Newrez.

As I mentioned on the Genesis business, truly scaled, great reputation with high-quality sponsors. When you look at this business and you look at delinquency trends across some of the other, what I would call, pure originators in the business, we truly stand out. I mean our delinquency percentages are about 3%, as I mentioned again, in earlier comments, we don't need to originate something for the sake of doing it. We need to do it with high-quality sponsors.

The $1.5 billion in the quarter, which takes us now to $5 billion. It's not a so-called race to get to 5 or 10 or whatever the number is, it's just creating high-quality loans that are going to generate mid-teens returns for both our third-party partners as well as our balance sheet.

When you look to the left side of the page, pretax income for the quarter, $33 million, 14% -- growth year-over-year. And then the annualized ROE on that business right now is about 13%. And I do think, again, with AI and technology, those numbers will likely go up over time.

When you look at Page 18, it's just a snapshot of the portfolio. You can have a look at that at your own leisure.

And then finally, if you look at Page 19, we continue to outpace the broader market. We continue to establish more relationships. We are investing in our people, we are investing in our sales force. And when you look at the overall growth, that will continue over time.

With that, I'll turn it over to Baron, who will take you through the Newrez section.

Thank you, Michael, and good morning to everybody. Starting on Slide 21. And just kind of continuing with Michael's comments as well, Newrez had another great quarter with third quarter pretax income, excluding mark-to-market of approximately $330 million, which is up 7% quarter-over-quarter and delivering a 24% annualized operating ROE for the quarter. The results driven by our origination strategy, growth in subservicing, higher servicing fees and lower amortization.

And the performance continues to show the power of the platform, delivering on our results first ethos by achieving 15 consecutive quarters of high teens to low 20s annualized operating ROE.

Moving to Slide 22. Our edge is simple. We stay disciplined and nimble to optimize returns while maintaining operational excellence and client trust. We execute through a dynamic channel strategy, coupled with a robust product ecosystem with a focus on our homeowners and clients. And we invest in game-changing technologies to redefine workflows, raising the bar on customer experience, driving our efficiency throughout our platform.

Turning to Slide 23. We estimate annualized savings from our technology and AI investments of approximately $125 million, which will further drive our cost leadership. Our co-development with Home Vision is ahead of schedule with straight-through processing of eligible loans expected to launch in the fourth quarter.

Our partnership with Valon is on track with phased migration of loans to Valon OS in the first quarter of 2027. And once these platform investments are completed, they are a key driver and us growing market share without sacrificing any shareholder return.

Turning to Slide 24, our originations business. Funded volume came in at $12.9 billion, down 19% quarter-over-quarter, mainly due to interest rate environment lowering overall origination volumes. However, we remain focused on non-agency growth and increased overall non-agency volumes up 8% quarter-over-quarter and 30% year-over-year despite the market conditions. And while market competition continues to pressure gain on sale margins, we maintain pricing discipline, we do not chase market share, and we stay focused on maximizing returns.

We also remain opportunistic on co-issue MSR acquisitions with $5 billion in notional volume as we continue to diversify our investment strategy. New products this quarter include our Easy Click home equity solution, expansion of Vantage score utilization and we're excited about our new joint venture with EXP Realty, the second largest real estate platform in the U.S., and are working through our due diligence and more to come in the next few weeks.

Moving to Slide 25. In and our market-leading servicing platform, our focus remains in growing our capital-light fee-based third-party business with 15 new clients and approximately $80 billion in new loan boarding this year. Subservicing remains a foundational capability of our platform and our operational performance is evidenced by our client retention rate.

Our owned MSR portfolio continues to perform well across products. And while agency and Ginnie delinquencies increased slightly quarter-over-quarter, we attribute this to seasonal factors. And while delinquencies remain low from a historical context, our special servicing business has significant opportunities to deliver superior outcomes for both homeowners and clients across market cycles. Our business has never been better positioned, and I look forward to continuing to share the next chapter of the Newrez growth story.

Back to you, Michael.

Thanks, Baron. Finally, just on the investment portfolio, continue to look for opportunities in this marketplace where we see certain dislocations. I would say while spreads are a little bit wider, as I -- again, as I pointed out earlier, the balance sheet has really been there to support our origination businesses as well as our asset management business. And I think you'll see a lot more of that as we go forward.

So again, exciting times for us. We look forward to answering any questions that you may have. We'll now turn it back to the operator. And -- that's it so far.

[Operator Instructions] Your first question comes from the line of Doug Harter with BTIG.

Can you could -- talk a little bit more talk a little bit more about the plans to grow the AUM and asset management, which products do you see the most momentum in right now to deliver that growth?

Sure. So I'd -- one is continue to establish more relationships with what I would call the big wire house banks who are distributing products through the wealth divisions. When you look where we are across, whether it be the sculpture platform, we launched something called our home, which is a Rithm fund through One of the large banks will continue to do more of that. So that should -- that will help with growth.

The product areas around what I would say, the wealth side are things such as capital solutions, which take advantage of dislocations in markets. We're looking at 40 Act funds on the sculpture side through some of the large banks. That's more of a liquidity vehicle around a hedge fund type product. The real estate business, as I mentioned earlier, will continue to grow. So when you look at the kind of the wirehouses, that's an area of focus for us as well.

What I would really say, and then I pointed out, we had our first close on our ABF fund this past quarter from a large pension fund here in the U.S. the amount of demand that we're seeing today for products that we either manufacture or that we have expertise in, is probably the highest I've seen in, quite frankly, in my career. I'm old, and I've been doing this for a long time.

So when you look, for example, on the resi side, we have a ton of interest in whether it be SMAs on, Baron pointed out, doing all this non-agency product, we make the products that our clients want. So right now, we're seeing extreme demand, what I would say, in ABF and ABF type products, again, whether it be through our funds business or through specific SMAs.

You take the Genesis business. When you look at some of this stuff on a levered basis, you're talking about mid-teen returns. We put our money where our mouth is. We take equity positions. So you're going to see a lot more growth in those businesses. When we look at the broader platform, one thing that I think is extremely different today than where we've been in the past is we have real collaboration across the house. We're working on branding when you look at -- we have three brands. So we have Rithm, Scope or Crestline. We sit down with a client, and we're not changing any of the investment teams. We're not changing any of the investment processes, but it takes us 10 minutes to talk through what the three different brands.

We need to get to a place where we have a common brand. It's a much easier story. And quite frankly, LPs want to allocate to fewer managers that have more products that are available. We're going to lead with our expertise. We're going to lead with our performance first. Credit is going to grow. Our multi-strat business is going to grow. Our real estate business is going to grow and our ABF business is going to grow. And then we'll continue to look at opportunities to acquire other managers.

The other area I pointed out that we need to be in at some point is infrastructure. It's not hiring one or two people to build around that. We need to actually have a real infrastructure business. So I think you're going to see some significant growth as we go forward, and we're really excited about it.

Your next question comes from the line of Bose George with KBW.

Actually I wanted to ask on the mortgage banking side, it looks like your gain on sale margin was up in the Consumer Direct and the wholesale. Is that just a mix of product? Or was there sort of actual improvement? And then just on gain on sale trends that you're seeing for locks in September, October after rates have gone up?

So -- yes, I would tell you on the direct-to-consumer channel, it definitely is a little bit of a product mix, right? You're seeing less refinances, and you'll start to see more of our home equity products and more of our non-QM products. So you're basically driving a little bit of a higher return overall.

On the wholesale side, obviously, it's a very competitive market. And we're continuing to basically test that product and not chase. But I do think that coming into the fourth quarter, you're going to continue to see that. There's definitely going to be more pressure on the wholesale side on margins overall.

And, Bose, not surprisingly, the interest rate environment is going to drive overall origination volumes. And we've seen a pretty material, I would say, decline in production coming from September to October, and you're likely going to see something close to about 25%.

And, Bose, part of that is the market. The other part is like when we think about having one investment dollar, what is going to be the best return for our shareholders. So that's the other way we think about the origination business. And again, this echoes the earlier comments in that we don't need to originate a loan for the sake of originating loan. With prepayment speeds at very low levels, our MSR book will continue to manufacture and produce a lot of great results for the company. So I think that's the other thing to point out here.

Okay. Great. And then just on the book value quarter-to-date, is that relatively stable?

Yes. It's -- I mean, you should assume it's roughly unchanged.

Your next question comes from the line of Crispin Love with Piper Sandler.

Just in the Asset Manager on further growth, you've called out infrastructure a couple of times. So can you think about a potential inorganic opportunity there? Do you think it would follow a similar playbook to Sculptor, Crestline? Is that capability that you need to buy fully with scale? Or if you do it on a smaller scale and then build within the current platform? And then just relatedly, is there any interest in adding digital infrastructure data center investment to the platform?

Yes. So I think it's more likely to be similar to the Sculptor, Crestline or something that's even potentially larger. Yes. I mean we need to be in the space. We do invest in that space when you look at the credit business, and you look at the teams at Sculptor. Sculptor has, give or take, 350 professionals there, give or take, 100 investment professionals, you think that where everything in credit where everything in ABF, so there is investing that goes on there.

Same thing at the Crestline side. We're not putting these kind of investments today on our balance sheet at the Rithm level. So it's got to be something of scale. I don't -- we don't want to start with something that is a couple of folks, and then it's going to take us 5 years to scale it up and miss that opportunity. So it's something that -- we have our eyes and ears out and hopefully there's something that's attractive to us and a potential partner that will help us scale.

Great. And then just a second question on mortgage. You called out $125 million of potential cost savings. Just kind of first kind of timing of those and then also just the ROE impact in -- ROEs and new rents have been strong, talking by, I think, 24% or so this quarter. So when you look out over the intermediate term, kind of what's possible for the operating ROEs in that segment. Could you see expansion from levels today just given the AI savings and eventual normalizing of the mortgage environment?

Yes. So I mean I'll just start with top line stuff. So if you think about our mortgage company, which says, give or take, about $4.5 billion of revenue and you look at what we bring to the bottom line, I think there's a lot of room for higher earnings there. That -- and AI is going to help that. And I mentioned in my opening remarks, you talk about anybody that's ever taken out of mortgage, which most folks have, the archaic nature of that with providing paperwork and you think about underwriting guidelines, what have you -- that will change, and I think AI is going to help significantly.

Couple that with the investment and this company Valon that we're working with, which is really a tech company I referred to it earlier as a software company, but we're going to be using their software platform for our servicing business. That is going to make us highly efficient.

As far as the timing of -- and I'll talk to this in a second. And the timing of really seeing the earnings, I think, is going to be most likely you'll start to see them kick in, in '27, but they'll go on for '27, '28. When you look at product, the one thing -- and I look across the board and obviously, a lot of other peer companies that are in, whether they be in the Buy Now Pay Later business. And I look at the valuations on some of those companies versus us where we trade at 5x earnings in -- and we actually make more money than most of these other companies out there when I look at some of the kind of the digital banks that are valued higher. We got to figure out a way, one to roll out more products but to change our valuation. And I think a couple of things here, and it will catch on. Everybody wants to be in a growth equity type stock. I look at us relative to our peers across the board, and this is no reason for us to be trading where we do. That's one. But I do think you're going to see these savings come in, in '27, '28. And then -- and I'd like to see us launch more products, but they've got to be creditworthy products because I do think at some point the credit markets will turn and you start to see delinquencies trend higher. Right now, we're not seeing that, but I do think you'll see that at some point, and that's where our special servicer, which is second to none, should kick in and generate even more earnings for the house.

Your next question comes from the line of Kenneth Lee with RBC Capital Markets.

Just on the Genesis capital side, wondering if you could just give us sort of like updated outlook or thoughts around potential originations volume, just given the current rate outlook there.

So our goal there, when you look at the business, if we're going to do -- I think the production numbers will probably do something between $6 billion and $6.5 billion of production. Credit really matters, as we all know, and all this stuff while saying that I think the opportunity for us to grow our multifamily business on the lending side is significant. As we -- so the way to think about that business as we rollout, whether it be SMEs or funds around the Genesis product, a good chunk of production could go into those funds. But what we want to do is really grow the amount of origination we have. So you continue to grow earnings at the public company level.

So it's a combination where I think that the multifamily business from the origination side will grow significantly over time, and it has grown significantly over time. The RTL business, we all know things get challenged when interest rates, you have mortgage rates of 7.25%, 7.5% or something in and around there, things could be challenged. But when you look at this paper, we make loans to high-quality sponsors. That's really the bottom line. High quality sponsors, the velocity or the turnover of this product, the duration here is give or take a couple of years. So the real growth, I think, is going to be more on the multifamily side as we go forward.

Great. Very helpful there. And just one follow-up, if I may, on the Elecor Properties side. Just looking at the San Francisco leased occupancy rates. Just curious, looking for, what factors do you see that could potentially help drive higher occupancy rates going forward?

Yes. Kenneth, thank you for the question. I would say two things really. One is we have very manageable lease roll over the next couple of years. So we have firm ground by which to really, I think, achieve significant occupancy gains going forward. We also know that in San Francisco, tenants are pursuing the best product, and we have a very, very fine portfolio in San Francisco. Tenant demand is currently in the neighborhood of 10 million square feet of tenants out looking for space. And we are incredibly active. We're as active in San Francisco currently as we have been in a very long time with leading companies across a variety of industries, including tech, AI, legal, financial services. So we're really firing on all cylinders, and the market has certainly been very receptive to the capital improvements that we're making specifically at one market and one front, which we've not mentioned a few times.

So the team is hyper-focused on getting that occupancy up, back to levels that San Francisco and these three buildings in particular, are more accustomed to, but we feel really good about the progress and the execution currently.

Your next question comes from the line of Trevor Cranston with Citizens JMP.

Another question on Newrez. I'm looking at Slide 36, particularly the prepaid speed and amortization on the MSR. Just curious if you could just give an outlook for how much room you think there is for MSR or prepay speeds to come down in 4Q and going forward if mortgage rates kind of stick above 7%? And more broadly, if that benefit plus the expense savings you guys have talked about is kind of enough to offset the pressure on the origination side?

So yes, I mean, I think you're kind of getting to the floor on speeds. You just have a certain amount of turnover for just life events that are going to continue to drive plus also when you think about some of the seasoning on our portfolio, you're just going to really be at that floor. So I don't really think that speed are going to come in very much lower than what you saw in, say, September speeds overall. And the offset, I will tell you, in between amortization and originations is prettily near, right, from the balanced business model on how we look at it. But also you have to think about it as Michael's comments and my comments, right, we're not driving just growth for growth sake, right? We want to make sure that we're focused on margins. And if the market really gets very, very competitive, I think that -- we're going to look at it in that manner as opposed to just chasing volumes. But I will tell you overall, we do think that we have a balanced business model. We want to stay in front of our customer base, right, in our 4 million customers and making sure that we are delivering products for them, right, as our core focus. And if there's opportunity outside of that, we'll basically -- look to basically enter into those markets, and that's our multi channel strategy helps us kind of take advantage of those opportunities when they become available.

The other thing I would say is if you look at the business and to your question about how the servicing book will offset the origination volumes, we look at the entire company. When you look at the servicing book today, I think there's roughly $15 billion of escrow deposits, Fed raises rates 25 basis points, it's a huge lift to kind of the firm from a net interest income standpoint. So the balanced nature, I think, of everything that we do across our entire business and that can include anything from the mortgage company to Genesis to Elecor, Asset Management business is something that I think it's going to reward shareholders as we go forward. So that's why when you look at our business model this quarter versus some of the other folks in the marketplace, that's one of the other reasons why I think we had a good quarter.

Your next question comes from the line of Marissa Lobo with UBS.

I wanted to ask about the investment portfolio and how you're thinking about the opportunity here? Are the new deployment levels attractive enough to grow the portfolio? Or is the focus more on securitizing and recycling capital?

I think it's both. It's also the investment portfolio. We will continue to recycle that. I'm going to give you the example where if we don't originate a mortgage loan, but we could take $1 of capital and reinvest that back in our asset management business, along with a third-party LP who's paying us a management fee, those earnings are recurring, and they trade at a much higher multiple than the so-called the mortgage loan that's going to sit on the balance sheet.

So I think it's a combination where we'll use our balance sheet to continue to support our origination businesses. We're going to be opportunistic and look for areas where we can deploy significant amounts of capital. And Baron pointed out, the non-agency business at Newrez year-to-date, I think $6-plus billion. When you look at that, a good chunk of that is not QM that actually sits on balance sheet, and then we do securitization.

So there'll continue to be significant earnings as we support our origination businesses, look for opportunities where we have market dislocations. As I pointed out, this office building, for example, that we sold in Boston, Virginia. Some of the other stuff where we're entering that business had a 75% to replacement value, and we'll continue to look at other things, and there's always something that comes up.

The beauty, I think, where we sit as an organization is that between myself and some of my partners, Charles Sorrentino and others, we've been doing this for a long, long time, and we have very, very good relationships with our bank partners, but also we know a lot of folks in the marketplace and we should continue to see opportunities across the board. So it's a little bit of everything and the investment portfolio will grow over time, but it's going to be opportunistic.

That's helpful. And there's been a lot of movement on housing policy recently, particularly around LLPA Vantage scores and now mortgage insurance. Can you talk about how you're thinking about the potential impact on Newrez?

Look, we -- obviously, we have good relationship with our partners in D.C. And I do think that the policies that the director of the FHFA are putting out there, we support them. We were on the pilot program with Freddie Mac on the Vantage score. So certainly, from our perspective, we do think that, that will continue to drive benefits for our homeowners. And if there are changes on any of the insurance premiums. Obviously, we'll incorporate that and deliver those savings directly to homeowners. And so we certainly support the initiatives that the director continues to drive.

Your next question comes from the line of Jason Stewart with Compass Point.

Just a follow-up on Marissa's question. In terms of the Newrez platform, how important is the technology aspect of the platform? I mean this is a very dynamic mortgage market and implementing these changes seems like it's a little probably tougher today than it has been in the past. Could you just talk about where you're positioned in terms of technology versus some of the other peers?

Baron could probably -- I'll give you from a high level and then I'll turn it to Baron. Our technology budget, when we look at expense overall is pretty significant. The amount of personnel we have around the house related to the technology, so-called business is very significant. I'm a believer that on technology, you're better outsourcing to so-called experts in the industry who are going to be there to either build you models or build your software that's going to make your business run better. But while saying that, we have a ton of people there, and we have a ton of investment. The partnership with Valent should be extremely significant across our entire business as we go forward. And it's not only Valon, but there's others as well. So Baron, do you want to share...

No. Michael, you are right. I would tell you that we look at our technology dollars to try to focus on prioritizing the initiatives that have the biggest impact. And Michael talks about Valon, right? And if you think about Valon overall, and there is nothing like it in the market, and we're really excited to basically incorporate that technology into our business, the investments that Rithm made in Valon back in 2019, we've had that front row seat. We've talked about this before, really kind of seeing how it just drives overall operational efficiency, improvement in workflow, our entire servicing organization has been working with Valon for the last year plus. Everybody is definitely excited about what's ahead. Obviously, there's a lot of work for us to basically go from, I'll just say, today, throughout the end of 2027 and basically in doing that overall conversion.

But the -- if you just even look at all of the AI initiatives and you just continue to see how and what AI does. It's pretty remarkable about how we think about different initiatives and how that can impact our business. And our focus really is just making sure that we're prioritizing our technology dollars and our technology focus on the items that really move the needle that drive our efficiency and to drive ROE. And that -- it sounds easy. I know we focus on a lot, the management team here, and we worked through it, obviously, with Michael on what we try to prioritize every day. So that's what I would tell you on how we focus. This is -- and you asked the question in the beginning, how does this basically -- and how will this impact how we perform in the industry and how we compete. We think this is one of the top components of how we can continue to drive performance from an ROE perspective and differentiate Newrez in -- throughout the market. No question.

And Michael, a follow-up to Marisaa's question on the investment portfolio. There seems to be, I call it, episodic opportunities to buy things like non-QM and secondary. If you could just elaborate a little bit on how you're thinking about liquidity relative to opportunities, if there's sort of a metric that we can look at as a minimum liquidity measure? Or how are you thinking about funding markets in relation to the opportunity?

[Audio Gap]

clean portfolio. We cleaned it up. We took over the management contract a couple of years ago. We can't get that off the ground because nobody cares. It's tiny. And at some point, we'll either -- we're evaluating our options what to do with that.

Yes, we're always looking for opportunities. I mean if we are going to grow our real estate presence whether it be Elecor, we continue to look at more office opportunities, but we don't need to be just an office. I brought up the scope folks. They have an unbelievable track record. And they do things that are very, very different from the rest of the pack. So across the board, you're going to see us grow pretty significantly, I think, on the real estate space. If there's an opportunity to acquire another commercial REIT, we'll do it as long as from a credit standpoint, it underwrites, we don't want to take over someone else's issues right now. I think that's part of the issue with a lot of these REITs that are stuck out there.

And in the correspondent business, what are the real economics of originating in a 7%-plus market in terms of do you own the customer? What -- how do you think about that?

I'm sorry. Can you repeat the question?

In the correspondent residential mortgage on the Newrez.

Yes. I think if you want to buy cheap MSRs, if MSRs are cheap, you do it. And if not, and this is -- Baron and I on the same page on this, we don't need to originate a loan just to have more corresponding value unless we love the valuation of the underlying MSR and there is real gain on sale. If there's real gain on sale and there's margin, we'll do it, and you love your MSR valuation. If not, I'd rather take the dollar and support our asset management business or put it into a Genesis or something else where we think we're going to earn a mid-teens return.

There are no further questions at this time. I will now turn the call back to Michael Nierenberg for closing remarks.

Thanks for all the questions. We look forward to updating you during the quarter and next quarter. And thanks for the support always. Have a beautiful weekend.

This concludes today's call. Thank you for attending. You may now disconnect.

Good morning, and welcome to the Rithm Capital Second Quarter 2026 Earnings Call. [Operator Instructions] note this event is being recorded. I would now like to turn the conference over to Emma Hoelke, Deputy General Counsel. Please go ahead.

Thank you, and morning, everyone. I would like to thank you for joining us today for Rithm Capital's Second Quarter 2026 Earnings Call. Joining me today are Michael Nierenberg, Chairman, CEO and President of Rhythm Capital; Nick Santoro, Chief Financial Officer of Rhythm Capital; Baron Silverstein, President of NewRez; and Peter Brindley, Head of Real Estate at Elecor Properties. Throughout the call, we are going to reference the earnings supplement that was posted this morning to the Rithm Capital website, www.rithmcap.com. If you've not already done so, I'd encourage you to download the presentation now.

I would like to point out that certain statements made today will be forward-looking statements. These statements, by their nature, are uncertain and may differ materially from actual results. I encourage you to review the disclaimers in our press release and earnings supplement regarding forward-looking statements and to review the risk factors contained in our annual and quarterly reports filed with the SEC. In addition, we will be discussing some non-GAAP financial measures during today's call. Reconciliations of these measures to the most directly comparable GAAP measures can be found in our earnings supplement.

With that, I will turn the call over to Michael.

Thanks, Emma. Good morning, everyone, and thanks for joining our Rithm Q2 earnings call. The company had a terrific quarter, proving the power of the platform is working. All of our divisions, Newrez, Genesis, Sculptor, Crestline and Elecor, all delivering good results during the quarter. While the markets were extremely volatile, our results show the depth of our platform and the risk culture and experience of our investment teams. .

Today, we feel the markets are different. We have a new Fed chair -- likelihood of higher rates for longer which plays extremely well for our business when you think about an $850 billion MSR portfolio. The time is now for firms like parts to differentiate ourselves with performance. Our investment professionals have been in the market for 20-plus years. We've seen the best and the worst of markets, and we will use that experience to do our best in providing alpha for our clients. Our ethos, risk management and performance first is how we think of our fiduciary responsibility to our clients and shareholders.

The growth of our third-party business is something that is essential to us. When we acquired our management contract from Fortress in 2022, our goal was to build a formidable third-party business. I'm very proud of where we stand today. Our teams have Rithm, Sculptor and Crestline manage north of $60 billion in third-party assets with over 200-plus different clients and LPs. Between our third-party client business and our balance sheet, we manage -- we now manage more than $100 billion in investable assets.

When we look at our origination businesses, they are second to none, Newrez, which is one of the leading mortgage companies in the United States; Genesis, which is one of the leading nonbank construction lenders in the United States a true market leaders. They both create products for not only our balance sheet but also for our fund offerings. So now we take a step back and we ask ourselves where do we go from here? It's simple, create value for our LPs, add product offerings in areas where we have the expertise fill in gaps in in-trend real assets and continue to perform for our clients creating value for our shareholders and LPs.

I'll now refer to the supplement, which has been posted online. I'm going to start on Page 3, and then I'll turn it over to my different partners as we go through the various sections. Page 3 up top, Rithm today is north of $100 billion in investable assets. We also have $1 billion of permanent capital. That's very different than a lot of firms out there. When we look to the left side of the page, our balance sheet, give or take, $50 billion.

A lot of the balance sheet is used to hedge out our mortgage company, our MSR portfolio. Newrez is one of the top 5, as I pointed out earlier, mortgage originators and servicers in the United States. This year, we project to originate about $65 billion in mortgage loans. We serve over 4 million different homeowners. Genesis, the #2 U.S. residential transitional lender. This is a company, again, we bought from Goldman and going back to 2022. At that time, we were doing roughly $1.7 billion a year in production. This year, we'll do a little bit south of 7 million and I'll get into those numbers shortly.

Elecor, which was formerly known as Paramount is a premier owner operator and manager of [indiscernible] core Class A office properties between New York and San Francisco, totaling a little under 10 million square feet. Peter Brindley talked to that company here shortly. When you look to the right side of the page, our asset management business, continues to grow. I feel like we're just hitting our stride right now and really excited about the future growth prospects there, not only in AUM, but actual performance.

When we look at that business, we have 3 different divisions today. One is Sculptor which, again, I'll get into some of the numbers here shortly, Crestline and then Rithm Capital, which manages funds on a couple of the different warehouse platforms. When you look at the overall performance of our asset management business going back, Sculptor has been around for 30-plus years. And the folks at Crestline led by Keith Williams have done a great job building that business as well.

Most of -- one of the more important things when I look at our platform and -- versus a number of others, we continue to invest our own capital alongside our partners in our funds. Not everybody does that. Page 4, when we look at the quarter end review, $338.9 million in EAD or $0.60 per diluted share of GAAP net income, $20.2 million or $0.04 per diluted share, some of the movement in the GAAP income has to do with our hedges around our MSR portfolio.

Book value of $6.9 billion which correlates about $12.33. I think coming into the quarter, we were $12.50. So essentially, it's unchanged when you think about dividend and depreciation. Today, our book value is, give or take, about $12.50 million. Common stock dividend, 10.6% dividend yield, quite frankly, from our vantage point, obviously too high. Our dividend paid is $0.25 per common share, and our cash and liquidity ending Q2 was $2.1 billion. When I look at Rithm, the asset management platform, again, I feel like we're just hitting our stride.

We have a number of different product offering. I believe that we are true leaders in everything in real estate, credit in our ABF business, which is something that between all of our different partners here is something that's near and dear to our hearts because that's how we grew up in the business. When you look at the multi-strat fund for year-to-date performance, closing out Q2, it's up roughly 8%, great job by the team there. Across the platform, there's north of 200 different investment professionals, and we have 16 offices globally.

Page 7. When you look at our Asset Management business, as I pointed out, the multi-strat fund net return for the first 6 months approximately 8% over 3 years, 12.3%, with a ball number of 4.7%. Conservative risk and liquidity positioning are the core tenets of the platform, and where we stand today, we've -- the team has taken the risk down based on some of the volatility we've seen in the marketplace. When you look at scale, again, we started this business in 2023 or really the third-party business with virtually 0 in third-party AUM. Today, we're at $61 billion and growing.

Our strategy is not just to grow AUM. We want to lead with performance, and that's going to lead to more AUM and make sure that we have a suite of product offerings for our clients where we could serve all of their needs. When you look at the fundraising side of our business, we continue to expand -- one is we're expanding personnel there, but 2 is we continue to see more gross inflows coming into the business. Current fundraising activities are focused on ABF, direct lending, capital solutions, our multi-strat business and then stabilized core real estate plus real estate credit. So across the board, leveraging the expertise we have in-house with our existing personnel. And like I pointed out in my opening remarks, we'll add areas once we make sure that we have the expertise internal.

New product offerings in development include insurance solutions, infrastructure, and we continue to work with our bank partners on private wealth. From a deployment perspective, we target the most compelling investment opportunities. We don't need to deploy capital for the sake of deploying capital. We want to make sure that we deploy capital in areas where we feel like we have the best risk return for our clients. We want to make sure that we're nimble and allowing capital to be deployed when opportunities again arise not just to deploy capital for the sake of doing it.

Page 8, when we look at our AUM, strong organic and inorganic growth. When you look to the left side of the page, we acquired Crestline -- the Crestline business at the end of Q4 in last year. That continues to be a very, very good business, great track record, great group of folks. Sculptor is doing great. And then when we look across the board, our CAGR up 28% to now again where we give or take, about $60-odd billion. Key note here, 71% of our AUM is longer-term AUM.

Now I'll touch on the real estate side, I'll hit a couple of slides, and then I'm going to turn over the Elecor section to Peter Brindley, who's who helps lead that organization for us. So when you look at Rithm real estate, the way that we think about it today is we have Elecor, which is a -- obviously, it's a portfolio of buildings and a true operating company that sits on balance sheet. Over the past couple of years, we've put out about $200 million in equity across a number of different real estate strategies, most -- some debt, some equity.

So when you look at the bottom part of the page, we -- across some of the realizations that we saw in Q2 and some of the realizations we're expecting in the returns in Q3 have been very, very good. One thing I'd like to point out here, if you look on the right side of the page, we bought an office building and I have mentioned this on prior earnings calls, I think in '24, 2 years ago, [indiscernible] in Virginia, we paid, give or take, about $26 million to $27 million, something in that range. We expect to realize a purchase price or a sale price on that of roughly $55 million to $60 million.

I bring that up because in real estate and in most cases, one is we have to be extremely good from an operating perspective. Peter and the team have done a great job, and Peter will talk to that in a minute. But the most important thing in some of the office stuff and in other real estate, you make money when you buy cheap assets. So when we think about the Elecor thesis, and I'll flip to Page 11 on that.

The entry point really matters. So when we buy buildings, in this case, we're buying Class A office at a 75% discount to replacement cost. When we look at geography, Class A office -- and Peter will talk about Midtown South and just all the leasing trends we're seeing there. But being in the right geography on the main avenues really, really matters. Our basis -- our low cost basis allows us to deploy future capital to further enhance value. We have a lot of projects going on around the building not only at the so-called Elecor level with some of our larger strategic partners who own pieces of these assets alongside us.

When we think about supply, there's limited new supply. And again, when we think about replacement costs, it costs multiples to build these buildings today versus our entry point. And when we look at San Francisco, for example, there's no new office construction in San Francisco. Flight to quality tenants and institutional capital continue to pursue the best in Class A office product. We see that now. I pointed out in prior calls, we, as an organization, have a need for, give or take, $75,000 to $100,000 of office coming up here over the course of the next couple of years as we think about our geography and the current buildings that we're in and where we're going.

And then when I look at the operating team, we have a great operating team. We did the Elecor deal, which was, again, paramount at a time when the company was essentially forced into a sale. We'd like to be in those situations. And when we look at that, we've cleaned up the G&A. We've appointed Peter to help lead the organization and the team has done a great job.

With that, I'll turn it over to Peter who will take us out for the rest of the Elecor stuff, and then we'll turn it over to Baron, who will talk about -- or back to me on Genesis and then to Baron on Newrez.

Thank you, Michael, and good morning. Turning to Page 12. At Elecor properties, we continue to execute our business plan while seamlessly emerging Elecor's operational expertise with Rithm Capital financial strength to further enhance our trophy quality portfolio. The quality of our portfolio, coupled with our planned significant investments alongside our partners, will ensure we continue to attract the world's leading companies across a variety of industries well into the future. We are making great progress on our plans, the specifics of which are generating excitement in our 2 markets and we believe contributed to positive results through the first half of the year. Our portfolio consists of 10 core assets totaling 9.9 million square feet, approximately 7 million square feet of which are in New York and the balance in San Francisco.

The core portfolio is currently 86.5% leased with an average in-place rent of $90 per square foot and a weighted average lease term of 8.3 years. Key portfolio highlights include: on leasing, year-to-date, we have executed leases and had leases pending on more than 681,000 square feet across the New York and San Francisco portfolio with weighted average initial rent of approximately $100 per square foot, 21.4% higher than the weighted average initial rent for our 2025 transactions. Approximately 62% of this robust leasing activity is based in our San Francisco portfolio where leasing fundamentals continue to improve.

Operational excellence. Since the acquisition, we have identified and implemented operating efficiencies at the management company of approximately $44 million. Opportunistic recapitalization. We are currently assessing opportunities to potentially JV select high-quality assets as well as potentially finance our unencumbered asset. Financing. During the quarter, we closed a $283 million CMBS financing at 1325 Avenue of the Americas. And subsequent to quarter end, we closed on the refinancing of 31 West 52nd Street, extending the building's current loan maturity while ensuring a well-laddered maturity profile throughout the portfolio.

Lastly, we are moving swiftly to execute our growth-focused capital improvement strategy, which includes, in conjunction with our JV partners, the repositioning and amenitization of 4 key assets, 2 in New York and 2 in San Francisco, reinforcing our commitment to deliver a leading workplace experience resulting in a truly differentiated experience for our tenants. During the second quarter, we made significant progress on our capital improvement plans at both 1633 Broadway and 712 Fifth Avenue in New York and One Market Plaza and One Front Street in San Francisco.

As a reminder, at 1633 Broadway, we are transforming the lobby, developing an amenity space with a signature bar and event venue, creating a 200-seat conference space and upgrading the plaza and building elevators. At 712 Fifth Avenue, we are curating a hospitality-driven amenity offering, which is currently under development. In San Francisco, at One Market Plaza, we are redesigning atrium and grand floor experience in developing a state-of-the-art conference center, fitness facility, Atrium Bar, 7-floor Skybar game room and rooftop deck.

And finally, at One Front Street, we are reimagining the lobby with a cafe; bar and restaurant and a full elevator modernization. In addition, we are adding a full amenity space with a gym, conferencing and a private Speakeasy. We expect that our capital improvement strategy will drive significant rent growth and occupancy gains in 2026 and beyond.

Turning to Page 13. In 2025, we leased more than 1.7 million square feet, approximately 76% of which occurred in New York and the balance in San Francisco. In 2026, approximately 62% of our leasing velocity year-to-date, including both leases signed and leases pending is occurring in San Francisco, predominantly with leading technology and entertainment companies as well as leading law firms. In both New York and San Francisco, a significant percentage of our leasing velocity is occurring with tenants that are new to our portfolio and expanding within the portfolio. At quarter end, our New York core portfolio's leased occupancy was 91.6%. Initial rents in New York year-to-date on leases signed and leases pending are 32% higher as compared to our 2025 transactions.

Leasing fundamentals continue to strengthen in midtown, particularly in well-located, well-amenitized Class A buildings, we are very well positioned to capitalize on this tenant demand, which continues to reflect the city's diverse tenant base. Robust demand, limited near-term new development and conversions of office buildings to alternate uses will continue to serve as significant tailwinds as we execute on our business plan in New York. At quarter end, our San Francisco core portfolio's leased occupancy was 64.9%, up approximately 6% quarter-over-quarter. Year-to-date, we have approximately 425,000 square feet of leases executed or pending, which exceeds our San Francisco leasing velocity for full year 2025.

Strong tenant demand, historic levels of venture capital funding to San Francisco-based companies and a return to in-person work, coupled with our growth focused strategy will drive continued leasing velocity and occupancy gains in our San Francisco core assets this year. We are moving very quickly to execute our key objectives and look forward to updating you on our progress.

Thanks, Peter. Just a couple of quick comments here. When you look at -- and I'm just going back to Page 12 for a second, when you think about $90 a square foot for our average annual rent, the ability or our desire actually to invest capital back into these buildings to achieve higher rent growth, thus achieving higher NOI. And as Peter pointed out, with great tenants, I think it's going to lead to a really wonderful result for this company. And like I said earlier, you make money in this business, particularly on the real estate side, when you buy quality assets at attractive levels, and that's what we've done here. And again, the team has done a great job. So Thanks, Peter.

On Genesis Capital, I'm going to go to Page 15. A great story here. I pointed out earlier, we acquired this company from Goldman's Merchant Bank going back to 2022. At that time, we were doing $1.7 billion a year in total originating this quarter, we did $1.9 billion. Pretax income was a little under -- was about $42 million, going again back to 2022 pretax income back then was about $47 million. So when you think about it, what we've accomplished in 1 quarter was what going back to '22 was accomplished in a full year. ROE, 17% annualized operating ROE. And when you look quarter-over-quarter pretax income is up about 26%.

Another thing to point out here when we look, this business today is one of the hottest products, I would say, in the so-called ABF/ fund market as well. So not only do we have this business feeding our balance sheet, this also feeds our funds really, really important. And as I get to the -- in a couple of more slides -- later into a couple more slides, what you're going to see is that the ability to truly grow this business is significant because the real market share around the so-called RTL space is so low and it's such an attractive product because it's such a high coupon short-duration product where our LPs and investors truly love this product, is something that we're really excited about as we think about the growth there.

Page 16, just to give you a little bit of a portfolio composition, the other thing I'll point out before I talk about the portfolio composition, we lead with risk and credit first in this business. There's a lot of folks that have had significant issues around their risk. And quite frankly, their delinquency profile -- our delinquency profile here is extremely low, and I think part of that speaks to the overall culture of the firm. So when you look at Page 16, taking it to the left side of the page, the summary by loan type, you have construction bridge and Reno. Construction is about 50%. Your bridge is about 34%, and your renovation is about 12%. Summary by structure between arm and fixed, give or take, 50-50. Here, we have it at 45-55 that will change over time, depending upon what happens with rates in the yield curve.

And then when you look at product type to the right, what you're seeing is dominated by single family, although we're doing a lot more right now in multifamily. Key portfolio metrics, if you look to the bottom part of the page, the loan to after repaired value is about 63%, loan-to-value about 68% and looks across 76%. Real conservative metrics. Again, that business is led by [indiscernible] Smith, who does a great job us, Clint and his team.

Page 17, just talk about the Genesis growth. I pointed out earlier, the upside in this business is significant. I think some of this, as we think about our LPs and our third-party client business, some of the -- a lot of the growth will be driven by the demand from our clients in the third-party business, which is significant. When we look at the overall CAGR, you can look at some of the numbers here. And when you think about the overall market share of Genesis, I think we're only scratching the surface here, and we expect more great things out of this company.

So just to summarize on my part here. The real estate side at Elecor, great job done by that team, very, very excited about the upside there. I'd like to look at just our so-called purchase of the Boston, Virginia property as a proxy when we think about holding period investing capital and getting true value out of that asset. We're going to look to do the same there on Elecor. And I think Genesis again, we're only scratching the surface.

With that, I'll turn it over to Baron.

All right. Thank you, Michael. Good morning. Starting on Slide 19. Newrez had another great quarter. Second quarter pretax income, excluding mark-to-market of approximately $308 million, which is up 12% quarter-over-quarter, and delivering a 22% ROE for the quarter overall. Results were driven by our disciplined origination strategies, higher servicing fees and despite interest rate volatility, higher recapture and lower amortization, and the performance continues to show the power of our platform and our ability to drive consistent earnings.

Moving to Slide 20. You can see where we're investing in our road map to re-envision how we approach the mortgage process to further unlock efficiency and operating leverage. Our teams have met key milestones in co-creating game-changing technology through our proprietary ReziAI solutions and in partnership with Valon and Home Vision as we discussed in prior quarters. These initiatives have only begun to drive meaningful outcomes with instant approval decisions, best-in-class self-service containment rate and delivering customer satisfaction.

On Slide 21, we highlight our results first approach to our technology and AI investments. Our revenue growth is focused on maximizing overall customer lifetime value through the expansion of our partner base, product innovation and homeowner retention. And our expense initiatives continue to deliver operational leverage to further reduce our cost per loan, currently 1/3 below industry average and forecasted to be 50% below industry average post-Valon and Home Vision integrations. Executing this growth up and spend down strategy will allow us to continue to deliver for our shareholders.

On Slide 22, in our originations business, funded volume came in at $15.9 billion, which is up 1% quarter-over-quarter as we maintained pricing discipline and did not chase market share and stayed focused on non-agency through our wholesale channel and customer retention through our consumer direct channel. Both channels combined now 40% of our overall originations, which is up 11% quarter-over-quarter. Co-issue MSR acquisitions came in at $5 billion, up 45% quarter-over-quarter as we continue to expand our momentum on MSR growth. And while market competition continues to pressure gain on sale margins, we continue to lead with performance and deliver consistent returns. On new products, we're excited about the expansion of our home rewards and insurance offerings and a new personal loan product that broadens our consumer finance offering.

And moving to Slides 23 and 24 and our market-leading servicing platform, our focus remains on growing our capital-light fee-based third-party business with 8 new clients this quarter and $27 billion in new loan boardings. We remain on track for the transition to the Valon operating system in early 2027 that we estimate will deliver a total annual expense savings in excess of $65 million or a direct cost per loan reduction of 21% to $93.

Our owned MSR portfolio continues to perform well across products, including [indiscernible] delinquencies that remained stable quarter-over-quarter. And while delinquencies remain low from a historical context, our special servicing business has significant opportunities to deliver superior outcomes for both homeowners and clients across market cycles. Special servicing remains a foundational capability of our platform and our operational performance is evidenced by our client retention rate. Our business has never been better positioned, and I look forward to sharing the next chapter of the Newrez growth story.

Back to you, Michael. .

Thanks, Baron. I'm just -- I'm going to wrap up on Page 26, and then we'll open up for some Q&A. On the investment portfolio side, as most of you know that follow us, the investment portfolio supports our different operating companies, and we use the balance sheet for more opportunistic investing. As you look back to the quarter or really the first half of '26, we have done about $6.6 billion in residential investments, we did $3.7 billion in securitizations, achieving an annual ROE of about 15%. So in some of my earlier comments, as we think about the ABF business were really significant in the ABF world. .

We probably do more on balance sheet than others, but that makes a likely shift as we go forward here and continue to expand our third-party franchise. One thing I do want to point out away from the volume that we're seeing in RTL and non-QM and through our own origination channels, we did enter into a flow arrangement where we're purchasing home improvement loans. And just this past Friday, we closed our second home improvement loan securitization, about $300 million. So that's been a very good avenue for us as well.

So overall, what I would say is when I look at the business today, things are functioning and performing extremely well, very proud of the team, very proud of the business that we have here to and look forward to updating you on the Q&A. So now we'll turn it back to the operator for Q&A.

[Operator Instructions] The first question comes from Doug Harter with BTIG.

Could you talk about kind of the outlook for continuing to grow asset management and kind of as we look forward, 12 months or 24 months as you think about the asset generation, kind of how much of that gets funded on Rithm's balance sheet versus with third-party capital?

Sure. So thanks for the question. When we look at where we're going with the asset management business, again, in our remarks, we acquired Sculptor, I believe, in -- at the end of '23. So figure like we're, give or take, a couple of years in, we've seen between Sculptor, Crestline and [indiscernible] at the Rithm asset management level, with AUM at $60 billion. I would say, over the course of the next couple of years, there's no reason that can double. The one thing I just want to be really clear about is we're not in an AUM race, we need to perform and and that's going to lead to more AUM.

When we look at the operating business and let's just take Genesis, for example, Genesis will do $6.5 billion or $7 billion of production. I see no reason why we can't double that in 1 year or 2 years as we continue to grow our funds business. As we all know, in our capital structure, our operating as a REIT and paying out these significant dividends, the more we could shift to our funds business, the better it will be for our equity holders. So overall, I see significant growth in our funds business. When you look at the product offerings, we have a number of different product offerings, as I alluded to again in my comments, in the marketplace today. So we're extremely optimistic where we're going with the business. And performance has been great. You look at Sculptor in the first half on the multi-strat fund. They're up 8%. I mean, the numbers speak for themselves.

And I guess along those lines, can you talk about any progress on raising third-party funds for Elecor or JVs? .

Sure. So when we set out and we get asked the question, why? Why do this deal, when we did it last December, I think, is when it closed. These are office buildings. They're not bonds. You don't just buy something and flip it. So our initial thesis was we were going out, we're going to raise third-party capital alongside us. We still are having a number of conversations with what I would call, third-party LPs and third-party partners. We are currently -- we went out with 13016 Avenue, we have an LOI, we're finalizing some documents. We'll likely have a partner on that asset that will probably close by the end of Q3. And so that's an example where we're going to bring in a partner on a specific asset.

I think overall, making the investments in these buildings, keep in mind in some of the larger buildings, for example, in one market, our partners, Blackstone on that. We're investing capital alongside each other into this asset to grow NOI, and as a result, we think that's going to improve the value of those assets. So the long-winded -- my long-winded answer to this is we have partners in place. We're going to have more partners in place and we're really excited about where we're going with this portfolio. I think you're going to see that business grow for us, quite frankly. We're looking at more and more office. We're looking at more and more asset classes across the spectrum in the real estate world. So I think you'll see that asset class grow for us.

The next question comes from Jason Stewart with Compass Point.

Just another follow-up on the Elecor business. Where are you seeing the most traction? It's great news on the Sculptor performance. But what are you seeing the most traction in terms of fundraising? And how does that cadence progress throughout the quarter? .

So we're out with a number of different funds. I think from a legal perspective, I can't really disclose specific funds that we're out with. But if you think about the platform, with where we stand with one of the premier direct lenders in the marketplace in the Crestline business, opportunistic and regular credit on the Sculptor franchise the Sculptor Real Estate Group came off a $4.6 billion fundraise, and we're starting to see some inflows into the multi-strat business. So it's really -- we're starting to see inflows across the board.

And then when you look at the ABF space, we're having numerous conversations around ABF products and funds. So it's truly across the board. The one thing that we want to be clear about, we're not going to be in a space unless we think we have the expertise in-house. And that was some of the other comments that I made in my opening remarks. But flows have been very good across the board. We're adding folks to our capital formation groups, and we're really excited about the prospects where the asset management business is going.

Okay. And then on the mortgage side, in terms of the MSR portfolio, It'd be helpful if you could give us a little bit more color on how realized cash flows trended at the end of the quarter given the move in rates and where your expectations are for for that just given the exit velocity of where rates are in the quarter?

So what we're seeing is, obviously, you're seeing fewer prepayments. I'll give you like just a metric when we look at our overall origination business. So we're -- from an origination perspective, if we were doing, for example, $400 million a day $350 million to $400 million a day. Now we're probably doing something between $200 million and $250 million a day. Part of that is our own desire to pull back based on where MSR values are and how we think about the deployment of capital as an asset management business, not just to do something for the sake of doing it, but overall cash flows are trending higher because prepayments are definitely lower.

You're seeing less velocity and obviously, in some of the housing stuff. So we expect, again, more cash flow, higher yielding -- higher yields on our underlying portfolios, but we are pretty thoughtful here as we think about the competition and think about gain on sale and and what we want to put on balance sheet or what we don't. I mean recognizing that we have between owned and third-party MSRs about $865 billion.

The next question comes from Kenneth Lee with RBC Capital Markets. .

Just within the asset management business and specifically within Sculptor, wondering if you could just talk about what drove the incentive fees there. And I know it's obviously very difficult to predict it, but any updated outlook in terms of where incentive fees could trend this year just based on performance so far. .

Sure. So the incentive fees at Sculptor was driven by an up cycle crystallization of incentive revenue. Most of the incentive revenue that comes through at Sculptor, about 70% of it comes through in the fourth quarter, but there are instances where we do recognize off-cycle incentive fees that was recognized in the second quarter.

Got you. And just one, if I may. Within the Genesis Capital business, the origination strength there that you saw. Wondering if you could just talk a little bit more about what the momentum is being driven by? And then maybe some color overall in terms of how Genesis Capital has been able to to grow originations faster than the rest of the market?

Sure. So demand for this product, as I pointed out, is as high as we've ever seen. Again, if you think about it, it's 1- to 3-year duration products. So just assume it's like 2-year duration product, give or take, 8% coupons levered returns in the mid-teens. So when you think about demand and think about some of our peers out there that own these large insurance companies, the amount of demand from insurance companies for this product is extremely high. You couple that with us rolling out new so-called ABF funds, SMAs that go along with this product, that's going to help drive significant growth in that company.

And we think that when you look at a couple of those slides that we put in the deck today, our ability to actually grow origination is significant. We've also made a lot of investments in people. When you look at where we are today versus when we first acquired the company a couple of years ago, the headcount is up pretty significantly. And then as we think about overlays, AI and technology similar to some of the things that we're working on and at the mortgage company level, we're excited about where that growth is going to go. But it's really driven by demand, insurance company demand, fund demand. And quite frankly, if we could create mid-teens type returns on a levered basis for our shareholders, we're going to do that all day long. So I would be very shocked if we can double and triple the size of this business.

The next question comes from Trevor Cranston with Citizens JMP. .

On Newrez, looking at the gain on sale margin, it looks like there was some improvement this quarter, primarily driven by consumer direct. Can you just give us some early read on kind of how you're seeing trends there early in 3Q as you see stability across the channels or kind of what you're seeing with rates moving higher? .

I mean I think the market's a bit kind of bifurcated. You saw the banks come out and they're gain on sales margins came in. So I do think you will continue to see us be very disciplined on how -- what our approach is from a gain on sale perspective. So I would tell you that there have been at least coming into what I'll say the beginning of the first quarter and even at the end of the second quarter, we did see a little bit of relief on gain on sale. So that's our expectation even with where rates are elevated today. .

Got it. Okay. And then kind of a general question on the MSR market. I was curious if you guys could just kind of broadly talk about if you've seen any particular trends in MSR pricing over the last few quarters. In particular, I'm curious about if you think the market is kind of appropriately priced in the improved efficiency of refinancing from all the investment and implementation of AI and improved technology that's coming online this year and next year. .

I'll give you my own -- just my own view. MSR pricing today is you're in a position where things are fairly negatively convexed. So obviously, being in the bond market forever, and as I think about our partners here and how we hedge out that book is something that's there's no shortage, what I would say, of experience in that -- in doing that. So when I look at absolute values, you're still looking at unlevered returns of something in upper single digits. But your room for error there is less.

So when Baron points out, whether it be bank pricing or other kind of nonbank pricing to create origination, we are little bit more cautious there than perhaps others. When you look at our real growth in the quarter and with the banks growing, and we haven't seen other mortgage companies come out and speak to what their growth is. So general view is the assets price extremely well. As it relates to AI and other technology around refinance, we -- I mean, I think today, we haven't seen anything that's dramatically different. We point out we're going to be going on the Valon platform of which we own 9.9% of that company as part of the deal we did to go on that platform. We're really excited to work with them. They're absolutely fantastic, really smart.

So I think you're going to see improvements in technology, not only just on the servicing side, but also on the origination side, which is going to -- which when you think from an expense standpoint, if we have a company that does between $4 billion and $4.5 billion and we're bringing $1 billion-ish down from a pretax standpoint, the ability to capture a significant amount of of efficiency and expense there through AI and technology is going to be pretty great for us. And others, if they describe value to the same type of thing, but I don't think you've seen the real efficiency yet. We got to be really, really good around marketing. We've made significant investments in our company and on the marketing side, and we're making significant investments on the technology side. So we want to be the clear winners here. We hope we're ahead of the curve. But as we all know, the mortgage operating business is not an easy place to operate.

The next question comes from Crispin Love with Piper Sandler.

Can you share your outlook for the Newrez business just in the current environment, we're in the better seasonal part of the year for originations, but the environment has remained challenging. You definitely did benefit from the service servicing side, but just curious on the big picture outlook on the origination outlook over the back half of the year. .

Michael will talk briefly about it, like rates higher for longer. You see the resiliency on the purchase market. Rate in term refinances, I think will continue to be pressured in this rate environment, but there's still significant demand for housing. And there still opportunities on the home equity side, whether that's cash outs or home equity products, home equity loans and HELOCs. So I think from -- if you look at the pure volume perspective, I think the MBA forecast is probably directionally correct. And as to where consumer demand is in our expectation. .

I think, Crispin, the other thing just to talk about is new product innovation. And one of the things that we're going to -- that we're continuing to focus on is launching new products through our origination business and new products to our client base. So when you think about it, if there's 4 million homeowners and you think each house has 1.5 people or 2 people -- many people you think that you could tap into roughly 7 million consumers. So you're going to see more and more product innovation coming out of us where we actually own the origination business. I used the example of the home improvement loans where we have a strategic partnership with upgrade. We'll likely do more of that going forward, but also launch some of our own origination businesses where we can put more product out there, which hopefully will drive more earnings for the company. The other thing we're extremely mindful of when you look at where rates are and not just to originate a mortgage because we own a mortgage company. I think that's one of the things that truly differentiates us from others where we could be nimble about how we redeploy our capital as an organization. .

Great. And then Michael, just on that last one, I don't know if this is necessarily where you're going with it. But could you discuss if you'd have any interest in buying back stock near these levels. Results remain really strong, but just the valuation trading low to mid-single-digit multiple sizable discount to book value. So just curious why you wouldn't be leaning more into the buyback at these levels, especially when you look at the potential value of the whole company. .

Yes. It's -- obviously, we've gotten asked this question over the years as we trade between whatever discount we are to book and book value, I think our general belief is, one, as a REIT, we continue to distribute more capital; two is if we think we could grow the business longer term that's going to reward shareholders in a different way than going out and buying back stock. I think historically, if you look back to companies that bought back stock, it really doesn't do a whole hell of a lot, quite frankly. And being that we pay out $1 a year, we always need more capital to grow our business. So I think the likelihood of us buying back stock here unless we brought in a third-party partner and we explore different ways to bring in third-party capital into our funds business is -- the net-net is we're not going to buy back -- we're likely not going to buy back stock. It's a Board decision, but right here, we're likely not going to buy back stock. .

The next question comes from Michael (sic) [ Matthew ] Erdner with Jones.

You touched on it a little bit earlier about the sculpture incentive fees, but kind of stripping that out in some onetime hedge gains, do you still view the kind of core EAD run rate in the low mid-50s?

Yes, Matthew. When you back out the sculpture incentive that we received this quarter and you back out the incentive income on a run rate basis, we should run around $0.50 on a core basis.

Got it. And then going back to the Genesis platform. You mentioned the growth that you kind of expect there. What levers are you kind of wanting to pull? Or I guess, what is the most attractive opportunity? Does it kind of sit on the construction site or bridge to the more attractive product at the moment? .

We're doing more on the multifamily side -- on the lending side on multifamily, some of those loans are -- can be a little bit larger in size. I think we're going to continue to focus there. And then more broadly, we'll focus across the board on on all the different products. The main thing there for us is sponsors. We don't want to just put money out there to kind of fix and flip lenders unless they have the wherewithal from a financial perspective to be able to support their business in a downturn. There's been a lot of headwinds, what I would say in the SFR space with some of the noise out of D.C., where that ultimately ends up, I'm not really sure. I think things are a little better now than they were before.

But there's still a little bit of headwinds around some of the headlines in the SFR business. So I think you'll see more growth from us in the multifamily side. The total addressable market is extremely large. And as we think through this versus where we are and others are, we think we're going to see significant lift in that business.

Got it. That's helpful. And then can you just kind of remind me what the average size of those multifamily loans are? .

There are, I think, $10 million to $11 million something in and around that kind of range. .

The next question comes from Michael Piccolo with Wedbush.

I know you mentioned already the view with buybacks as a return of capital. but with earnings available for distribution comfortably exceeding the dividend, is there any thought of a potential dividend increase? Or is it kind of the same thought process around that type of return of capital as well? .

It's the same thought process. We're going to redeploy our capital. Clearly, we're not -- and I did a CNBC segment, I think, last quarter. We're not thrilled with where our stock price is by any means. So we continue to evaluate different ways to to see the stock price increase. While saying that, we don't want to give back the capital if we think we could redeploy the capital at a higher return for our shareholders and continue to build our business.

You rolled back the clock, we started the company in 2013. It was really an owner of MSRs, you look where we are today, you're managing north of $100 billion in assets, to Crispin's point, our valuation or multiple where we trade versus earnings is is obviously low relative to the -- to other peers, I would say, in the asset management business or in some of the financial service side, but we're going to stay the course right now.

Thank you. This concludes our question-and-answer session. I would like to turn the conference back over to Michael Nierenberg for any closing remarks. .

Thanks for all your questions. And if there's any follow-up, let us know. In the meantime, have a great rest of the summer. Appreciate your support, and have a great day. .

Thank you, sir. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Good day, and welcome to the Rithm Capital First Quarter 2026 Earnings Conference Call. Please -- please note this event is being recorded. I would now like to turn the conference over to Emily Hoke, Deputy General Counsel. Please go ahead.

Thank you, and good morning, everyone. I'd like to thank you for joining us today for Rithm Capital's First Quarter 2026 Earnings Call. Joining me today are Michael Nierenberg, Chairman, CEO and President of Rithm Capital; Nick Santoro, Chief Financial Officer of Rithm Capital; and Baron Silverstein, President of NewRez.

Throughout the call, we are going to reference the earnings supplement that was posted this morning to the Rithm Capital website, www.rhythmtap.com. If you've not already done so, I'd encourage you to download the presentation now. I would like to point out that certain statements made today will be forward-looking statements.

These statements, by their nature, are uncertain and may differ materially from actual results. I encourage you to review the disclaimers in our press release and earnings supplement regarding forward-looking statements and to review the risk factors contained in our annual and quarterly reports filed with the SEC. In addition, we will be discussing some non-GAAP financial measures during today's call. Reconciliations of these measures to the most directly comparable GAAP measures can be found in our earnings supplement.

With that, I'll turn the call over to Michael.

Thanks, Emma, and good morning, everyone, and thanks for joining us. I'm going to open my remarks and go a little bit into the credit markets for a minute and then we'll get into the supplement, which has been posted online. Baron Silverstein will cover the mortgage company. Peter Brindley will cover Elior, which was formerly known as Paramount, we rebranded the real estate company last night, and we're excited about that, and Peter has a lot of great stuff to discuss.

So for the company, another solid quarter for our company, demonstrating the power of the franchise. Activity levels across the board were robust. The firm, as we stand today, is extremely well positioned to take advantage of market dislocations as the combination of geopolitical risks and private credit headlines give us the opportunity to deploy more capital across the firm in both the ABF and credit space.

As market participants pull back, this will play to our advantage. The majority of our capital in our asset management businesses with institutional partners. As a firm, the exposure we have to software remains low. It is important to note, we have not seen any notable DQs in our credit exposure across the firm.

We do not see systemic risk in private credit. From our seat, this is a sentiment-driven dislocation that will play into our ability to look for opportunities in the credit space. When you look at direct lending, 80% of direct lending sits in institutional drawdown funds. Systemic risk care will be contained. Large BDC portfolio is present in software. While saying that, defaults in the largest BDC and sponsors sit below the 5-year historical average of 1.1%.

While saying all this, what's the opportunity for Sculptor and Crestline, we're structured to take advantage of dislocations. It's that simple. While saying all of this, when we think about dislocations, markets have rebounded. S&P is at all-time highs. Securitization markets remain robust, and there's lots of demand everywhere for ABS products.

During the quarter, we did $2 billion of securitization, and we see a consumer that remains healthy, particularly in our mortgage company as we look at the 4 million customers that we service. In our Paramount portfolio, which is, again, now called Delacour, leasing activities are excellent, and Peter will speak to that. New York City is now roughly 93% leased in San Francisco on fire as a result of the AI boom and the need for office.

San Francisco saw the strongest quarter of activity since 2019 and before. Availability declined by 600 basis points year-over-year. On the Paramount portfolio, the team did a great job in '25. They leased approximately 1.75 million square feet, 76% or 75% of the activity was in New York City with the rest in St France.

So before I go into the supplement, I want to lay out Rithm our companies and how to think about us. As everybody knows, we started the company in the spring of 2013 at Fortress we started with $1 billion of permitting capital. And since then, we've created the following: $8 billion of permanent capital all raised in the public market, $110 billion plus of assets $60 billion managed for third parties. That's our asset management business.

We have a $50 billion balance sheet that not only supports our operating companies also supports our asset management business. We have 1 of the top 5 mortgage companies in the United States. We started that from scratch in 2018. We have 4 million customers, as I pointed out before. We own one of the top construction/residential transition lenders in the U.S. known as Genesis Capital. We're the fourth largest owner of office in New York City. And again, that's through the acquired Paramount Group, which once again was rebranded to core and we paid north of $6.5 billion of dividends.

So what does all this mean? And where are we going? We'll continue to lead with performance, grow relationships with our LPs. Perform as expected and do all we can to increase our value prop for our public equity holders. You heard it before, and you'll hear it again that some of the parts in our view, is much greater than a whole.

Now I'll refer to the supplement, which has been posted online. I'm going to start on Page 3. So when you look at the firm, we have really, what I would say, 5 core operating businesses or really Sculptor and Crestline, our 2 asset management divisions couldn't be more proud, I couldn't be more excited where we sit today with both of those very complementary strategies, different One is basin for worth, one is based in New York City, as you know, with global offices everywhere.

Assets managed approximately $60 billion with more funds being raised daily. Eliqor, formerly known as Paramount, Class 8 owner-operator of offices in New York and San Francisco. Peter will talk to that business is doing great. NewRez, our mortgage company, again, number three, in total unit service in the United States, including the large money center banks and a top 5 U.S. mortgage lender. Baron will speak to that. And then Genesis Capital which is our residential transitional lender. It's also a large multifamily originator, and I'll speak to that in a little bit. and then you have Rithm, which is obviously in the investment portfolio and at the REIT level.

Page 4 for the quarter, what I would say is, as expected, $0.51 per diluted share when you look at our $28.6 million in earnings, 17% return on equity. GAAP net income is always going to be noisy due to hedges moving in and out as we hedge up our MSR portfolios. $57.8 million of GAAP net income, $0.12 per diluted share and a 4% return on equity. Book value, we ended the quarter at $7 billion or $12.51 and -- when you think about it, we paid $0.25 in dividends, effectively, we've grown book value quarter-over-quarter net-net. And that's truly a testament to our team as we think about the macro strategy and the markets in general.

Dividend yield, 10.5%, $0.25 per common share in cash and liquidity, we ended the quarter at approximately $1.3 billion. When you look at the quarter end review and we think about Rithm as and management, which is the so-called parent -- we deployed over $2 billion in corporate credit, ABF investments over and in ABF investments -- in the scope to Real Estate Fund V, they've committed $1 billion in the first quarter loan in 2026.

Keep in mind, coming off a great successful fundraise of $4.6 billion on their latest fund. Great brand, great track record and a great business for us. Sculptor had gross inflows of $600 million, ending the quarter with $37 billion of -- when you look at Crestline, overall performance terrific, outperforming our initial underwriting, grew management fee revenue by 16% year-over-year in the first quarter of 26%, and we'll continue to grow that business as we see the opportunities in the credit space.

Genesis Capital, when you look to the bottom left, best quarter in history Keep in mind on this business, we bought from Goldman in '22. At the time we bought this business, they were doing $1.7 billion of total loans for the entire year. So we did $1.6 billion in the first quarter. We added 118 new sponsors. P&L looks great and credit performance remains strong. We will not sacrifice production for credit, so we're on the same page. Newrez mortgage -- mortgage company servicing portfolio ended the quarter approximately $850 billion.

That includes third-party funded volume of $15.5 billion, generated $274 million of pretax income with a 19% annualized operating ROE in the first quarter. And then on the investment portfolio, robust run our non-QM business. We originate quite a bit there in the mortgage company. We did $2 billion securitization. During the quarter, we invested $3 billion in different mortgage assets that includes non-QM and residential transition loans, and we also purchased $140 million of home improvement loans under our flow agreement with upgrade in the total purchase since Q3 to $667 million. When we are looking at the platform again [indiscernible] we're growing areas where we means will add teams, not businesses because we're extremely happy where we sit between Sculptor Crestline and now known as LCR as we grow our real estate presence.

So when you look across the board, where everything in credit, where everything in the multi-strat business, on the real estate side, there's roughly $11 billion of AUM in the house. And in asset-based finance, I would expect us to grow that significantly with our third-party partners globally. When you look at the sculpture business on Page 8, again, we couldn't be more happy where we sit today. We're 2.5 years in total AUM $37 billion, most importantly, performance.

We are going to lead with performance. We're not going to leave with AUM. We have a fundamental belief that you could only deploy so much capital into the markets when the markets give you the ability to create, what I would call, alpha or outsized returns. That's how we view the business. So while all of us want to grow AUM, we need to lead with performance first, going to be more proud of the team could have been more proud of the business and really excited where that business is going to go.

Crestline, Arena Asset Management business, which we closed on in December of 25 and total AUM rough a little under $20 billion, a ton of investors across the platform. I was just in Tokyo 1.5 weeks ago meeting with both Crestline and Sculpture investors at a conference -- in Asia or in Tokyo, we have 15 different LPs invested in the -- in both the Crestline platform and the Sculptor platform. So real global brands the teams do a great job when you look at this business, we are well positioned to take advantage of any dislocations in the market today, investment performance.

If you look to the bottom left side of the page, Capital Solutions, 13.5 net since '22, direct lending 12 and change net since '23. So overall performance is very good. I mentioned earlier about software, only 7% of invested assets are classified in software.

As we look to Elicor, I'm going to turn it over to Peter, who will give you some color on the real estate business And then after that, I'll talk about Genesis and then Barenwill take the new risk portion. Peter?

Thank you, Michael. Paramount Group, as Michael just now said, it's become Elior properties come on Page 11, a new name and a new identity but a continuation of the same commitment to operating Class A real estate in New York and San Francisco. This new chapter reflects our intention to leverage the operational strength of the Licor team and the financial strength of Rithm Capital to further enhance our trophy quality portfolio ensuring that we continue to outperform and attract the world's leading companies. Companies in both New York and San Francisco are choosing to elevate the quality of their real estate to enhance collaborative culture, energize their teams and drive productivity it is among the most pronounced trends in our 2 markets.

The quality of our portfolio, coupled with our planned significant investments will ensure we continue to attract the most discerning companies across a variety of industries well into the future. This rebrand is an acknowledgment of the evolution of the workplace and signifies a renewed commitment to delivering a leading workplace experience. 1 where world-class amenities are integrated into our buildings, resulting in a best-in-class differentiated experience for our tenants. This is a story of continuity and acceleration. The Elicor properties team is energized and working hard to execute on our exciting plans.

Turning to Page 12. Elicor property highlights. Elicor owns, manages and operates high-quality, centrally located Class A office properties in New York and San Francisco. The portfolio is managed by a senior leadership team with deep knowledge of our markets and a track record of success. Elicor is a vertically integrated platform with in-house expertise in all facets of the business, including leasing, asset management, acquisitions, property management, redevelopment and financing.

Since the acquisition on December 19, 2025, we have identified operating efficiencies to increase our annual management company EBITDA by approximately $40 million. Elior's portfolio consists of 10 core assets totaling 9.9 million square feet. The core portfolio is currently 85.7% leased at share with an average in-place rent of $90 per square foot at share and a weighted average lease term of 8.4 years at share.

Key highlights include leasing. Year-to-date, we have executed leases and have leases pending on more than 360,000 square feet across the New York and San Francisco portfolio with weighted average initial rent of $94.64 per square foot, 14.9% higher than our weighted average initial rent in 2025. Capital Markets, Rithm acquired the portfolio for $585 per square foot an increasingly attractive basis given the recent transaction activity in both New York and San Francisco.

JV opportunities. Earlier this year, we launched a JV process on 1301 Avenue of the Americas a 100% leased Class A asset located in one of Midtown's best-performing core submarkets. Financing. Subsequent to quarter end, we closed a CMBS financing on 1325 Avenue of the Americas on a cash-neutral basis, extending the portfolio's current loan maturities while ensuring a well-laddered maturity profile. We also engaged on the refinancing of 31 West 52nd Street.

Lastly, we are moving swiftly to execute on our growth-focused capital improvement strategy, which includes the repositioning and amortization of 4 key assets, 2 in New York and 2 in San Francisco, which we expect will drive significant rent growth and occupancy gains in 2026 and beyond.

Turning to Page 13, Elicor Properties leasing highlights. As Michael mentioned, in 2025, we leased more than 1.7 million square feet, our highest annual total on record. A significant percentage of our 2025 leasing velocity occurred in New York, where we are currently over 92% leased at share and the balance in San Francisco. In 2026, a significant percentage of our leasing activity year-to-date, including both leases signed and leases pending, is occurring in San Francisco, predominantly with leading technology and entertainment companies as well as leading law firms.

At quarter end, our New York core portfolio's leased occupancy was 92.1% at share, up 470 basis points year-over-year. initial rents in New York year-to-date on leases signed and leases pending is 4.2% higher compared to 2025 as leasing fundamentals continue to improve across the board in Midtown Manhattan.

Our plan is to make significant improvements at both 1633 Broadway and 712 Fifth Avenue. 1633 Broadway is among Manhattan, one of Manhattan's largest buildings our intention is to transform the lobby, infuse a second floor amenity space with a signature bar and event venue, a 200-seat conferencing atrium on the 17th floor and Plaza and elevator upgrades. At 712 Fifth Avenue, we intend to create a hospitality-driven amenity offering commensurate with the trophy quality of the building, more details to come.

At quarter end, our San Francisco core portfolio's leased occupancy was 59.1% at share, driven largely by a couple of known move asset, One Market Plaza and One Front Street within the past year. Year-to-date, we have approximately 280,000 square feet of leases executed or pending, which equates to approximately 70% of our San Francisco leasing velocity in 2025.

The strengthening tailwinds in San Francisco, coupled with our growth-focused strategy will drive continued leasing velocity and occupancy gains in our San Francisco core assets this year. Our plan is to make significant improvements at both One Market Plaza and One Front Street. At One market, we are redesigning the atrium and the entire ground floor experience, infusing a state-of-the-art conferencing center, fitness facility, Atrium bar, 7-floor Skybar executive lounge and a rooftop deck.

At One Front Street, we are totally reimagining the lobby with a cafe, a bar, restaurant, the second floor amenity space with a gym, conferencing a private lounge, and we will also be fully modernizing the elevator system in the building. We are moving quickly to execute on our key objectives and look forward to updating you on our progress.

Thanks, Peter. By the way, a good sales pace by Peter for -- if anybody is looking for space. We've got a lot of really good stuff going on I'll now talk about Genesis. In my opening remarks, record quarter, $1.3 billion. What I would say is the business when you think about the noise coming out of the administration around build to rent and there was an article, I believe, in -- the Wall Street Journal that I read this morning that discusses how some of the builders are actually pulling back.

And I think there's roughly $3.4 billion of commitments that are on hold as a result of some of the new proposed bills that are either being passed or have been passed as it relates to developers needing to not only build these units, but then having to sell them in 7 years. As a result of that, you are starting to see projects on hold. You're seeing the SFR market at a standstill. When you look at our business, the Genesis business today is roughly 35% to 40% multifamily origination.

And I think what you're going to -- I know what you're going to see from us as we go forward, a lot more production in the multifamily space. We are going to grow that. At some point, we'd like to grow that around our asset management business. So we look forward to that. When you look at the business, it's been a great one for us. We expect to do something between call it, $6.5 billion and $7 billion of production this year.

The P&L on that when we bought the business in '22 was -- I think it was, what, roughly $45 million to $50 million or something like that. This year, we should do something between $150 million and $175 million of EBITDA. So it's been a great business. But like I said, we won't sacrifice credit in leu of production. When you look at as we go here, there will be some opportunities, in our opinion, in the so-called RTL space. there'll be some opportunities in the housing market as we see some of the single-family rental operators get out.

We have a very portfolio that we've been selling down to retail. We've got a couple of thousand homes there. But I do think there's going to be some dislocation there you're seeing in some of the equity prices and some of the larger institutional holders in that business.

With that, I'm going to turn it over to Baron, who will talk about new res, we'll touch on the investment portfolio, and then we'll open it up for Q&A.

All right. Thank you, Michael. Good morning to everybody. Starting on Slide 18. New res had another great quarter. First quarter pretax income, excluding mark-to-market of approximately $274 million, which is up 10% quarter-over-quarter and delivering a 19% ROE for the quarter. The results were driven by our disciplined origination strategy higher servicing fees and despite interest rate volatility, higher recapture and lower amortization. And this performance continues to show the power of our platform and our ability to drive consistent earnings.

On Slide 19, a just a quick highlight and just given the size and fragmented nature of the mortgage and home ownership market, we believe there is significant runway for scale technology-first operators like Newrez. Since the inception of our platform, we have grown our originations market share 8x and our servicing market share 6x, positioning us, as Michael said, as the third largest service run the fifth largest originator.

And as we continue to deliver on our strategy of making home happen, we continue to grow with our client base overall.

On Slide 20, we're highlighting our 2026 strategy with a focus on driving returns through revenue growth and a reduction in operating expenses. Our revenue growth is focused on maximizing overall customer lifetime value through the expansion of our partner base, continued product innovation and homeowner retention and that's shown in our consumer recapture rate and continued growth in our third-party servicing franchise. Our expense initiatives are laser-focused on harnessing technology to deliver operating leverage.

Our cost per loan, which is already almost half of industry average, we project an additional 15% reduction from our current run rate. In executing on this growth up and spend down strategy is going to continue to deliver for our shareholders.

Turning to Slide 21 in our originations business. Funded volume came in at $15.5 billion, which is up 31% year-over-year but lower than last quarter due to seasonal and interest rate factors. However, we continue to drive growth in our higher-margin direct origination channels, consumer direct and wholesale, which comprised 37% in Q1 '26, up 75% year-over-year.

And while market competition continues to pressure gain on sale margins, we maintain pricing discipline, did not chase market share and margins were contained within our historical 4-quarter range. We also had a very busy quarter of new product launches. Quick flows refinance application or wholesale Express home equity offer streamlined title, cryptomortgage and medical malls.

And most recently, our Freddie Mac Vantage score pilot demonstrating our shared commitment to responsibly expand access to home ownership and reduce cost to borrowers.

On Slide 22, we continue to build on our proprietary AI functionality, which is an end-to-end intelligence system, enabling our originations platform, allowing us to capitalize on our operational efficiencies. Our partnership with HomeVision is ahead of schedule with our first codeveloped tools being implemented by the end of this quarter. All of these platform investments will continue to improve our operating leverage, driving further efficiencies in loans per FTE capacity and turn times.

And finally, moving to Slides 22 and 23 regarding our market-leading servicing platform, we continue to grow our capital-light fee-based third-party servicing business with 5 new clients and $22 billion in new loan boarding. Our owned MSR portfolio continues to perform well as delinquencies remain stable quarter-over-quarter and the FHA delinquencies flattened as we normalize the impact of the new FHA modification guidelines.

Regarding Valin, we're on track for the transition to their operating system in early 27 and the magnitude of these benefits are moving to an AI-native and modern servicing technology solution cannot be overstated. We expect to materially improve our processes and workflows, providing us a significant competitive advantage through our operating flexibility. And it will also be a significant benefit to any and all servicers who choose to move to Valid. Once we're fully operational, we're estimating total annual expense savings in excess of $65 million or a direct cost per loan reduction of 15% to $93. So I continue to believe our business is the best positioned as it ever has been, and I look forward to sharing the next chapter of the Newrez grow store.

Back to you.

Thanks, Baron. Just wrapping up here on the investment side, probably 1 of the more active quarters we've had in a while, quite frankly. As I pointed out earlier, we did for non-QM securitizations totaling $2 billion.

The one thing I would say is this doesn't include some of the other things we're doing around certain funds that we've launched where we have flow products going in from some of our origination businesses, and we expect that to continue and to grow as we go forward here.

During the quarter, $3 billion of investment, $1.4 billion in non-QM loans, $1.6 billion in RTL. I pointed out earlier about the upgrade flow agreement. How we purchase more loans in the quarter. So overall, investment activities remain what I would say, despite all the the headline risk and the noise robust. What you're going to see from the firm as we go forward, hopefully, real growth in the ABF business under the Sculptor brands and and some of the other and Crestline brands. And again, just staying quite frankly, true to our core knitting and where we can create an edge in the marketplace, that's where you're going to see us grow.

But again, as we look forward, we're not going to sacrifice we're not going to sacrifice credit for AUM growth, and that's going to be our common theme.

So with that, I'll turn it back to the operator, and then we can open up for some Q&A.

[Operator Instructions]. The first question today comes from Crispin Love with Piper Sandler.

First, Michael, I appreciate your comments that you're not going to stack price credit for AUM growth. But can you just can you discuss the fundraising momentum in the asset management business and the outlook there, Sculpture and Crestline what you're seeing from institutions and then on the BDC private wealth side of those businesses, just all the noise out there?

Sure. So what I would say on the I mentioned before, and this is a little bit of old news, the real estate group at scope to just raised $4.6 billion and probably one of the largest successful fundraises in the real estate space, I would say, in a long time.

When we look at the core competencies, and this is where I'd like to think that we have an edge, whether it be a scope during you look at the overall track record and at what we've done at Rithm and then at Crestline, we're going to leverage the core competencies of what we do.

So for example, when I look at the ABF space, we launched an evergreen fund in the third quarter, with one of our warehouse partners, which is performing extremely well. The -- and that's backed by some of the production stuff that we create, whether it be in Genesis or whether it be in Newrez. When you look at Sculpture's track record around ABF, it's -- quite frankly, it's unparalleled. We'll be out with new funds there. here in the short run.

When you look at the credit performance overall as a firm and whether it be at Sculptor and/or Crestline, the credit performance has been very, very good. We don't see any real deterioration in any of the names that we actually hold within any of the funds. And I do think it's important to note when you look at the so-called noise in the private credit markets, a lot of that has been driven by retail.

So while everybody wants these evergreen funds that -- where you theoretically have liquidity, we know when the world turns sideways or the markets get dislocated, there is no liquidity or very little liquidity. And I think one of -- I cited this this morning, in the documents, it says you could have 5% redemption. So when these products are marketed and it depends on who the underlying fund manager is.

But when you look at the underlying markets and you have something that says in a document redemption limits, there's a reason that happens because if you think about it logically, if Mr. & Mrs. Smith want to take out $1 from their -- whether it be their BDC or their credit fund, and Mr. Mrs. Jones don't want to take out a dollar. Why should Mr. Mrs. Jones getpenalized because someone else needs liquidity and you have to liquidate a good position. That's why I think in a lot of these documents, you have these caps.

Now while saying that, I think it's an education process. There's been a lot of stuff that's been distributed retail. The good news for us is we don't have a ton of stuff through retail. The bad news for us or actually, the good news for us is as we go forward, I think the market is learning.

We don't think this -- as I pointed out in my opening comments, this is not systemic risk, and I think there's a huge opportunity for us.

The other thing I would say is that it is very, very difficult to deploy the -- we're not going to be Blackstone or Apollo or 1 of the largest managers. We're going to grow, hopefully, and we're going to grow through performance. But when you look, it's very, very difficult to create alpha when you have to deploy the sheer amount of capital that a lot of the large asset managers have. Kudos to them, they built great businesses, but it's very, very difficult to deploy that kind of capital.

As it relates to the BDCs, roughly, I think the numbers are 20% of the BDCs have software exposure. I pointed out in my earlier remarks, we haven't -- while the headline risk is dramatic. And if you go back to '21, when interest rates were 0, and you think about companies that were lent money at 20 times revenue, not EBITDA, revenue and now you have AI kind of taken a center stage, I think it's going to take time to play out.

We don't really know how that's going to play out. As you think about the software industry, I think software that's mission-critical to businesses are going to be the winners. There's going to be a bunch of losers right now, when I look at our business, we feel really good. As we think of capital formation here at the firm, we're trying to simplify our business, Sculptor is going to be our asset management business.

We have Crestline, which we closed, which is another division of asset management. They do different things. And now the teams are working together. And hopefully, we're going to raise a lot more capital. But again, that capital is going to be based on our ability to create alpha relative to the peer set that's out there in the marketplace. And that's what gets us excited.

So 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.

And the last point I'll make and then turn it back to you is when you look, get its above equity. The S&P is at an all-time high, something is not adding up here. So we'll see how it all plays out. But we feel really, really good where we are from an asset management standpoint, where we're going with that division and how we're going to create more FRE and hopefully turn the tide on the overall valuation of our public equity.

Great. I appreciate all the color there. That's a good segue to my next question because just one pushback that I get from investors is that, that rhythm has become more complicated. You're definitely diversified but in a lot of areas, the results have been strong, but some investors may just move on to a simpler story. So first, what's the response to that?

And then just second, what are the key ways that you're looking to simplify the business and the story overall to trade closer to that sum of the parts level.

One is we need to grow our FRE in our asset management business. And that is a big focus, right? So with -- obviously, part of that will come with AUM growth. Part of that will come with synergies. And that really is going to be a driver. So as we create more FRE, the asset management business can then get separated from the broader REIT. So when you think about it, we have really 2 main divisions in our operating business.

One is the mortgage company, which we again, another simplistic thing, everybody wants you to take it public. I'm not sure that it's the best time to do that. Obviously, you looked at 1 of our peer -- one of the pure mortgage companies, their stock, when you miss earnings and the stock goes down by in a day is no investor wants to be in that position.

So you can simplify by taking the mortgage company public, breaking out the asset management business, you have Genesis, which is going to continue to grow. But what you're going to see in some of these businesses is more third-party relationships because the one thing that's different today than where we were a couple of years back is that the adoption of ABF as an asset class for third-party LPs has never been greater. And there's a reason for that, right? So you've seen a little bit of rotation at a private credit into what we'll call real assets.

In the ABF space, you have assets that are kind of think about almost like hard assets where the cash flow is backed by these hard assets, or you're going to see more and more capital deployed there. But overall, like the REIT is still the REIT. If I had my [indiscernible], we paid out $6.6 billion of dividends over -- since we started the company in '13. 50 million shares, that's about $13 a share. You didn't pay out, I think, I don't have my calculator in my head, but I'll try.

Anyway, if you think about that, $13 plus 10%, it gets you to a mid-20s stock price. I think part of the challenge is as we continue to maintain REIT status and pay this dividend, which we have no intention of changing right now, growing the asset management business has to be job 1, thinking about simplifying the mortgage company story and Baron and the team have done a great job there. But I think AI and I think Baron is a little bit shy about the amount of money that we're going to save there. But I do think the mortgage industry is going to change dramatically.

So I think telling the story around the mortgage company, telling the story around the Asset Management division -- the REIT is not going anywhere. As you know, we just did the Paramount deal. We're going to bring in third-party relationships there. And it's really one of the things we're very focused on how do we grow earnings. Right? If we could grow in and create more growth businesses, that will help us because we have all the pieces we need at this point. But again, when I hear you, Crispin, part of the challenge is how do we simplify the story.

But I think the bigger asset managers, I would argue, are not any more simple than we are. I'd argue they're more complicated. So I think as we continue to get lumped into the REIT space, people who think we're complicated. If we go into the asset management space, I think we'll be less complicated.

Next question comes from Bose George with KBW.

Actually, on the -- switching to the mortgage side, your gain on sale margin on the wholesale and correspondent was down a little bit. retail was up. Was it mix doing some of that stuff? Or were there trends in the quarter that are worth calling out?

I do think it's -- it is a little bit of a mix. I also think there's some competitive pressures overall with respect to non-QM. I also think when you look at our performance in Q4, especially on the wholesale side, we definitely had a good quarter going into Q4, and I think we just basically normalized back to margins as to where we landed in Q1, in a lighter origination volume you would expect that things would normalize.

Okay. Great. That makes sense. And then just quarter-to-date, any changes in book value to call out?

No, Bose. We're essentially flat.

The next question comes from Doug Harter with BTIG.

Hoping you could talk a little bit more about Elicor and bringing in third-party capital just in kind of reducing the capital commitment down to kind of what you talked about at the time of the deal announcement.

So we closed a deal on, I think, December 20 or December 19. So we're 1 quarter in. Peter, Peter alluded to it, we've created, I think, $40 million of savings in 3 months. So we're very proud of that. And the conversations we probably had, whether I tell you it's 100 or more LP discussions since we've acquired the portfolio. What I would say out and Peter mentioned, we're out with a potential JV partnership on 1301, we have a JV relationship with Blackstone on one market in San Francisco.

We have a JV relationship with another party, Beacon on one of the other assets in San Francisco. We'll continue to either do JV relationships, which you'll see us quite frankly, create gains. But I think for now, it's really how do we operate the company I wouldn't be shocked if at some point, we bring it back out in the public markets.

I think it's a little bit too soon to do that. That could be a real capital raise as we think about creating external management fees around certain things. So I think it's all TBD. But over the course of the next kind of 9 months or 8 months through the year, it's likely we'll do some JV relationships third-party LP relationships on the assets.

Got it. And kind of given your view on commercial real estate, is it -- are you considering kind of deploying additional capital into your 2 target markets? Or is that mostly going to be through kind of the property enhancements you talked about?

I think it's both. In the business and we've gotten asked this question in the past, why did we see this deal. When you have the ability to acquire what we think are great assets at cheap prices, you do it. And I think it's that simple on this portfolio, on Fifth Avenue and Sixth Avenue, great operating team who we've unleashed, quite frankly, today relative to where the company was positioned before we acquired the company.

Peter and his team have done a great job. That's how you make the money. By keep assets at a very attractive value and these are quality assets. They're not mid-block, they're on the big avenue. So we're super pumped about this one.

The next question comes from Marisa Lobo with UBS.

Just moving to Genesis. Looking at construction loans are about 52% of that book. As tariffs are pushing up labor and material costs, are you seeing any stress on individual projects? Or how is underwriting change there?

Our underwriting box is always pretty tight. I don't think that's any different than where we've been overall since we've acquired the company. I will tell you listen, I'm like everybody else, if you look at consumer sentiment, I'm a little bit nervous. I mean you go out and you buy a sandwich, it's $15. So you have to watch out for, I think, overall, the state of the consumer some of the noise out of D.C. makes it gets you a little bit concerned as you think about the so-called build-to-rent space. I think seeing the article in the journal this morning, I think, is a positive as the administration will like, hopefully, peel back some of those -- some of the thoughts that you have there. But overall credit, we're extremely diligent.

The gentleman that runs that business for us is CleneroSmith, does a great job by background. He's a bank credit officer. So it's not just to grow volume, it's to grow volume in a meaningful way with a tight credit box. We do a lot of different things that I think a lot of the other folks in that space. and we'll maintain discipline around credit.

The portfolio, I think, is 3% is the delinquency numbers. And when you think about the average advance rate they're typically well below the industry. So we feel really good about where we sit there right now. But there's been no real change. But from a risk standpoint and a discipline standpoint, there's been no deviation to grow origination in lieu of credit.

And looking at the new origination yields of 9.5%, down from 10.1% in Q4 -- is this a function of a mix shift or tighter spreads in the market?

So a little bit -- everything is a little bit more competitive, as I pointed out earlier, there's huge demand for ABF products. This is one of the things that falls within that bucket. While saying that, you have points in and points out and you got different types of fees. So overall, the unlevered yields are still, give or take, about 10% and when you look in the securitization markets or we put them into funds in securitization, you're looking at well into the double digits on a net-net basis. So we feel -- we love that business right now.

The next question comes from Trevor Cranston with Citizens.

When you guys look at the proposed capital rule changes for banks, do you think that has any impact on their participation in the mortgage market or the servicing market? I guess, I was particularly curious about how you think that impacts the correspondent channel of Newrez.

It should help the MBS market, quite frankly. You got the basis in and around 105 basis points I think the type we saw pre the conflict in the Middle East was about 90%. That was the type we get out to 125, 130. Historically being a mortgage bond trader myself. I think stuff seems fair to cheap here.

I wouldn't be surprised that the banks come in. I think some of this depends on the ministry -- the new Treasury Secretary that's not Treasury Secretary, the new Fed share that's going to come in and wash when he gets selected. He's a little bit more of an inflation hawk, and we were talking last night about you have a massive deficit in the U.S. It's roughly $40 trillion. So they're going to have to continue issuing a lot of a lot of securities to fund that deficit.

The question is, is that more in the front end and the back end, I think the other thing that probably some of the banks CIOs are thinking about is inflation. You saw this morning in the U.K. I'm looking at bond yields of north of 5%. You look today, the front end of the treasury markets in the 380s, 10-year treasuries is now 4.35%.

So I think some of that will play into what the banks do. But overall, I would think with easier bank rules and the banks having a ton of cash from their deposits, you're going to see them come back into -- or they're in the mortgage market, but I think you'll see them acquiring more.

On the servicing side, don't no. I mean honestly, I think it's -- they're -- one of the -- a couple of the money center banks already have been involved in that space for a while. I think that could continue we just have to be disciplined about how we originate loans and make sure we're not doing something for market share versus actually making the money to which was Baron's earlier comments.

Yes. Okay. That makes sense. And then you mentioned briefly the kind of decline in valuations in some of the public mortgage companies that are out there over the course of this year so far.

Are you guys seeing any sort of M&A opportunity associated with that? Or are there any platforms you think that have maybe gotten cheaper that might make sense as a sort of add-on to the existing platform?

Historically, our M&A around the mortgage company space has been where we think we could acquire cheap assets as part of the overall acquisition.

When you look at the company today, we don't need anything new. So when you look, I think there's, give or take, 10,000 people, including contractors at the mortgage company, Baron and the team are focused on getting really efficient when you look at the adoption of AI and some of the partnerships that we've set up as a company.

I don't we don't have any to buy another mortgage company. If there is a mortgage company that's out there that's cheap, there's not that many left, quite frankly. When you look [ Rocketick ] acquired Mr. Coupe, which we built at Fortress, we built new res. There's this is not that many out there that are independent now. You have United Wholesale, but overall, I think we don't need anything more.

The next question comes from Kenneth Lee with RBC Capital Markets.

Just one on the Newrez side of the business and the potential benefits from AI and efficiency moves there. It looks as if in 2026 you could potentially expect some increased productivity around loan processing. Do you expect to see some of these benefits materialize over the next quarter or 2? Or is it mainly weighted towards the latter part of 2026. I just want to get a little bit more color around the benefits there.

Yes. On the origination side, right, we talked -- I talked a little bit about Home Vision and our partnership there. So that is going to be -- you're going to see those materials -- those benefits materialize coming into the second half of the year, right? Our initial product launch is ahead of schedule and our we hope to have those tools in place really going into the third quarter.

Got you. Very helpful there. And just one follow-up, if I may, just around the Crestline business and realizing that most of the clients that you're serving are from the institutional side. Wonder if you could just talk a little bit more about color you're seeing around institutional investor demand for direct lending. What are you hearing from clients more recently?

It's interesting. When I was in Asia with Keith Williams, who runs Crestline, people -- there's still a lot of demand, what I would say, for direct lending. While saying that, I think that's more institutional based. You are seeing a little bit of rotation. Obviously, with headline risk, if you're a retail investor and you're not in the markets every day. I think if you could rotate out, that's probably some of the stuff that you'll see go on over the next quarter or so.

But in general, we have all kinds of different funds in the market and capital formation continues. We have to lead with performance. If we're that heavily weighted to software and you sat down with an -- and you said, well, our software exposure is 20%, they may say like, I don't really want to do this.

I would say that the background of Keith and the team at Crestline and they go back to 25 years of -- and a lot of the folks in that very direct -- same direct lending space, whether it be the folks at Sixth Street or there or at Crestline come out of the old Goldman model. So we feel really good about it, and I think you're going to see more capital being raised around direct lending and they'll continue to do that.

The next question comes from Henry Coffey with Wedbush.

The flip side to the complexity issue, and we all talked about that a lot, is that there's always 1 business that does well and another that maybe doesn't do so well. But combined, you always end up at a nice spot. Can you -- if you look at your different businesses, Michael, can you tell us who not to pick on anybody, but how do you rank in terms of who's really knocking it out of the park right now? And which businesses are facing legitimate headwinds?

I would say -- and I don't want to sound like we're the -- I don't want to tell everybody we're always the best in everything. But overall, I think everything is performing extremely well. The real estate business, the Paramount or now known as Elicor portfolio is great.

The team there. We're so excited to be working together with that team. Baron there's nobody in our organization that worked harder than Baron other than me. Baron works his tail off and Baron and his leadership team do a great job around the mortgage company. Clint and the Genesis team continue to put up great results in the asset management business, I think it's just getting started.

We're at $60 billion now. And again, it's not an AUM rate, we have to perform. So when everybody asks, what else do we need or what's next? There's really nothing that's next unless we think we're going to create an edge in -- for our LP base and -- so I think and then the investment portfolio Rithm, Charles orentino and the team do a great, great job. So -- and we're all working together a long period of time. We love where we sit in the ecosystem, the -- if there's anything that kind of bothers us, it's the overall valuation of the so-called sum of the parts. But in general, I think all the businesses continue to perform really well.

More pedantic. When you look at the P&L and the EAD calculation, is this pretty much the way the business is going to look with some improvements in efficiency. It's just sort of the new overhead level?

No, I think we're always looking at overhead. We're always looking at ways to become more efficient. EAD needs to grow, and that will grow -- hopefully, grow as we -- as the asset management business grows and we get more efficient. But we're always looking at headcount, we're was looking at ways to become more efficient the mortgage company.

I think the mortgage company does about $4.5 billion of revenue, something in that range. When you think about it, if we net give or take about $1 billion-ish, there's a lot of room to actually get more efficient there. And I think it's not just people wise, quite frankly, it's process-wise, it's processes. And I think you're going to see that with AI changing the mortgage industry. So we're excited about that. But in general, we look at everything. Asset management fees should grow over time as we continue to perform for our clients.

$87 million in depreciation, is that the new run rate? Or is there some new extra items in there?

Henry, that's a little bit higher than the run rate. That includes both the indoor portfolio as well as loco. So as we sell down the indoor portfolio, you could expect that number to come to around $60 million, $65 million a quarter.

And the indoor portfolio, just for everybody's netification, that's our single-family rental business. As I pointed out, we have a few thousand units or a couple of thousand units, and that continues to get sold down retail.

This concludes our question-and-answer session. I would like to turn the conference back over for any closing remarks.

Thanks for everybody dialing in. Thanks for your questions. Thanks for your support. We look forward to updating you on another quarter here in the near future. Have a great day.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Good morning, and welcome to the Rithm Capital Fourth Quarter 2025 Conference Call. [Operator Instructions] Please also note today's event is being recorded.

At this time, I'd like to turn the floor over to Emma Hoki, Deputy General Counsel. Ma'am, pls go ahead

Thank you, and good morning, everyone. I would like to thank you for joining us today for Rithm Capital's Fourth Quarter and Full Year 2025 Earnings Call. Joining me today are Michael Nierenberg, Chairman, CEO and President of Rithm Capital; Nick Santoro, Chief Financial Officer of Rithm Capital; and Baron Silverstein, President of NewRez.

Throughout the call, we are going to reference the earnings supplement that was posted this morning to the Rithm Capital website, www.rithmcap.com. If you've not already done so, I'd encourage you to download the presentation now. I would like to point out that certain statements made today will be forward-looking statements. These statements, by their nature, are uncertain and may differ materially from actual results. I encourage you to review the disclaimers in our press release and earnings supplement regarding forward-looking statements and to review the risk factors contained in our annual and quarterly reports filed with the SEC.

In addition, we will be discussing some non-GAAP financial measures during today's call. Reconciliations of these measures to the most directly comparable GAAP measures can be found in our earnings supplement.

With that, I will turn the call over to Michael.

Thanks, Emma. Good morning, everyone, and thanks for joining our fourth quarter earnings call. So much to be excited about with our company. And before I get into the discussion, I want to thank our partners for all your support as well as our employees across all of our companies for all of your hard work and effort in driving excellent results for our LPs and shareholders.

On today's call, I welcome Peter Brindley, one of our new partners who has been leading all leasing and other divisions at Paramount. Peter will be speaking about Paramount, which is one of our new acquisitions on the real estate side, and Baron Silverstein, who you've heard from in the past will be speaking about New Res. As we think about 2025, it was an excellent year for the company, in which we executed for our clients by creating outsized returns for LPs and higher earnings year-over-year for our shareholders.

We grew our asset management business both organically as well as through acquisition, including adding Crestline Asset Management and to take private, as I disappointed out of the real estate REIT renamed paramount to our stable companies.

To date, we manage over $100 billion in investable assets across the firm. As I've said repeatedly, we will grow our firm prudently by creating alpha and results for our clients. While all of us in the asset management business want more assets, we will earn each and every one through performance. Financially, our company had a great year, a great fourth quarter, which I'll get into in our supplement. The diversification of our platform is paying off as we had a record fourth quarter from an EAD perspective. Book value year-over-year was higher despite paying out north of $600 million in dividends.

Our Genesis business, which manufactures and originates multifamily loans and residential transitional loans had a record year, both in originations as well as in earnings. This business produced just under $5 billion in loans and earnings were up 250% from the time we acquired the company in 2022. Just for a metric when we acquired the company in 2022 production [indiscernible] billion this year will cross north of $5 billion while maintaining prudent discipline around credit.

Our mortgage company, Newrez, had a great year. Year-over-year earnings grew by 13%. We continue to make significant investments in our tech stack as well as our marketing division as we work on our customer experience and our brand. During the year, we welcomed 2 new leaders to these divisions. Brian Woodring, who joined us from ROCCAT and Leslie Gillin, who joined us from JPMorgan, both experienced leaders in their field. We announced 2 transformative transactions on the tech side. One is Valent, which we announced this past week, which is a world-class servicing system, and Baron will speak to that and home vision on the origination side.

In our Asset Management division, we had a very good year. As I mentioned, we announced the acquisition of Crestline, which is a terrific credit shop with both an insurance and reinsurance business. Scope had a great year both on the performance side as well as on the capital from Asian side. with assets growing, especially the real estate division, which closed on a $4.6 billion new fund.

We launched on the asset management side, we launched our first evergreen fund on a bank platform in the ABF space. We created SMEs on our origination business with overseas clients. We launched our first closed an ABF fund with an initial seed from a pension of $200 million. While we are very pleased with our progress, there is so much more for us to do.

On the Paramount acquisition, what that deal is, it was an opportunistic situation. We acquired 13 large office buildings in both New York and San Francisco, which 10 -- roughly 10 are core. It's a real highlight for us. Not only do we love the basis for entry. We now have a great operating company, which will help create an edge for us as we look for other opportunistic investments in the real estate space. Looking forward, we will add to the platform where we need to offer products for our LPs and shareholders.

I'll now refer to the supplement, which has been posted online. I'm going to start on Page 3. As you look at Page 3. Again, as I mentioned, we have over $100 billion in assets being managed by the firm. That's both balance sheet as well as with third-party clients. The Rithm Asset Management AUM is $63 billion, the Rithm balance sheet business is $53 billion. When you look at our family of companies, sculpture world-class asset management business, providing credit, real estate and multi-strat investing, Crestline, large credit shop offering a vast array of credit offerings.

Paramount, as I mentioned, which is the real estate company and Peter will be speaking to in a minute. And just on a side note at some point, the Paramount name will go away because obviously, it's a little bit confusing between movie studios and other things. So we are currently working on a rebrand there. Newrez, our mortgage company, third largest servicer of mortgages in the United States and the fifth largest mortgage lender in the United States. And then Genesis, which is one of the largest residential transitional lenders in the U.S. and probably one of the hottest products when we think about from a fund formation that our clients want.

As I mentioned before, we're going to earn we're going to grow via results, and that's the way that this company was built, and that's the way that we're going to continue to maintain discipline as we go forward.

Page 4, financial highlights, earnings for 2025, earnings available for distribution $2.35 per diluted share, which represents a 12% year-over-year growth. We had an amazing quarter in Q4, which actually shows the diversification of our platform earnings $0.74 per diluted share. Stable earnings performance when we look for the company, we've earned 25 consecutive quarters where our earnings available for distribution were greater than the common dividend paid. Dividends, we paid out well north of $6 billion in dividends since we formed the company in 2013, while at Fortress. When you look at Q4 results, GAAP net income is $53 million, $0.09 per diluted share for the quarter, 3% return on equity. When you look at EAD for Q4, $419 million in the quarter, $0.74 per diluted share or 24% return on equity. When we look back to 2025, GAAP net income for the year, $567 million, obviously, the delta between Q4 and fiscal year 2025, has to do with the MSR mark that we took in the quarter to be a little bit more conservative, and Baron will speak to that in a minute.

For fiscal year 2025 from a GAAP perspective, $1.04 and return on equity from a GAAP perspective 8%, when you look for the full year earnings available for distribution, when you take out the noise, the company made a little under $1.3 billion, $2.35 per diluted share and a return on equity for the entire business of 19%. Book value reported at the end of 12/31 was $7 billion which represented a $12.66 per common share. When you look back, I think the year before, it was about $0.10 lower. When you look at where we are market-wise, the 10-year treasury is backed up and yield towards $4.30 mortgage rates on the other side have dropped a little bit. Book value today is probably between 12.75% and 13% -- I mean $13.

Our common stock dividend, we trade at roughly 9.2%. This was at the end of the year. And as everybody knows, we pay out $0.25 a quarter or on a fiscal year basis, $1 a share. Cash and liquidity, this is after balance sheeting the Paramount deal on balance sheet as we work to raise capital around that, both in a JV structure as well as in funds. We ended the year with $1.7 billion of cash and liquidity on balance sheet after funding everything in the business.

Page 5 year in a review. As I pointed out on the asset management side, a very, very good year scope had gross inflows of $5.8 billion in 2025, AUM grew from $34 million to $38 billion in the year. On the Rithm side, we closed different ABF products, as I mentioned, first evergreen fund, and we're out now marketing a closed NABF fund with an initial seat of $200 million.

On the Crestline acquisition, this kind of fulfills our mission of what we think on the credit side, and I'll talk to this in a minute, but Crestline is a little bit under $20 billion in AUM. They have a ton of different LPs. They had their annual meeting last week down in Texas. I was down there meeting with a lot of clients in and everybody is super excited. One is about the partnership as we go forward, but also what some of the pockets that we didn't have before that we currently acquired as a result of the Crestline organization and more importantly, the people there just are terrific.

So we're really excited about where we're going to go there. I mentioned Paramount. And again, Peter is going to talk to that. Class A office buildings in New York and San Francisco super pumped about that one. As many of you know, we at the Rithm level, not at the sculpture level, have avoided -- not avoided, I should say, but have not made commercial real estate a primary focus. This acquisition obviously puts us where we're the fourth largest owner of office here in New York City, and we're super pumped about that.

When you look to the bottom part of the page, on the left side, Genesis Capital, I pointed out that -- the team there has done a great job, $4.8 billion of origination in '25. Record earnings, client franchise continues to expand and we are going to lead with credit first. That is our mantra as we think about our origination businesses. Newrez, I pointed out, third largest mortgage servicer in the U.S. that does include the large banks, fifth largest mortgage lender in the U.S. servicing portfolio, $850 billion funded volume for 2025 $63 billion generated north of $1 billion in pretax income year-over-year is up 13%. And then we announced our strategic relationships or partnerships, including some equity investments on the technology side. On the investment portfolio side, we did 8 securitizations, $4 billion in UPB, we invested $9 billion in residential mortgage assets. That's through a lot of that through our origination businesses between non-QM, which grew a lot in the Newrez side and our residential transition loan business, which, again, is the Genesis business and we also entered into a flow agreement with upgrades to purchase up to $1 billion of home improvement loans, and then we purchased a little bit under $600 million in 2025.

From a macro standpoint, obviously, a lot of geopolitical risk everywhere in the system. The administration is extremely focused on affordability. They announced there -- the GSEs are going to purchase up to $200 billion of Agency MBS. We are not sure exactly what that amount is today for 2026. We think they can buy upwards of $155 billion -- while saying that, we think a significant amount could have already been purchased. What we did see in the quarter is the mortgage base is tightened, which means you're seeing lower mortgage rates relative to where treasury yields are -- as a result of that, we should see more mortgage production. You are going to see higher levels of amortization. The higher levels of amortization should provide an opportunity for us to generate more origination gains. As we look forward, we believe the yield curve will continue to steepen. I've been pretty vocal on a number of our earnings calls. We are set up for this. We are along the front end and not really short much, but if we're short anything, we would be short at the back end, we do think the yield curve will continue to steepen.

Obviously, President Trump announced Kevin Warsh is the new Fed Chair and we think that will continue again to lead to a steepening yield curve. The last part I'll mention on this page as we think about this agency MBS has done extremely well the past towards the end of the year. And the other space that's actually really in vogue. And obviously, we made a significant investment there is on the return to office or the office buildings that we have. And again, Peter will speak to that.

As we look at the power of the platform, Page 8 the asset management business will continue to grow. We don't -- just to be clear, we don't really need anything. When you look at this page, there are certain pockets that we don't have. We will -- for example, as we think about infrastructure, where we will grow our thing and my thing has always been, we're not going to grow in a sector unless we have the expertise around the house. I always like to use the example is you can't take the short stop and make him or her an offensive lineman that just doesn't work. When we look at our business today, we have a great credit business. We have a great multi-strat business, -- we have a great real estate business and our ABF business should be -- should grow substantially over time. But again, we're going to grow through our existing teams, and we have great teams. I think in the Asset Management business, when you look all in, we have about 700 folks across the platform that includes both investment professionals as well as support team.

So we're extremely well staffed and well suited for the growth in our company. But again, we do need to lead with results first. Page 9, scope they had a great year. I pointed out $5.8 billion in gross inflows, performance across the board, whether it be in the multi-stress fund, which is roughly $9 billion now, 15.5 million gross or 11% net in '25. The credit fund through '25, and this goes back in time, 18.9% gross and 14.5 million net asset management revenues in '25 up $95 million from '24. Again, we have everything we need in credit. We think we have everything we need in real estate will grow in areas that we don't have the -- either the staff or the -- what I would say, the wherewithal to grow unless we think we're going to create an edge or be a market leader.

When you look at the sculpture organization, 30-year track record, greater than 70% of the clients have been with the firm for longer than a decade, and AUM is now approaching $40 billion.

Crestline closed that transaction in December. I'm on Page 10, 18 billion total AUM, 700 investors across all strategies. The business has been in place for 20 years. Key Williams, who leads the asset management business has done a great job there, continuing to grow offices in New York, Canada, London, Tokyo and couple that with our culture partners. There's -- again, we have everything we need to continue growing and providing good value for our clients. When you look at '25, the Capital Solutions business, overall, since '22 generated a little bit south of 15% from a net IRR perspective, direct lending, it's a little under 13% since '23 in the NAV lending business, 11%.

A great brand. And again, we're -- I think the merits -- or why this deal works is we bring capital, when you look at the broader organization, there were things that we didn't have in that today, we have, for example, direct lending, a BDC insurance, reinsurance and capital solutions. So when you think about the credit business across both Sculpture and Crestline today, I think it's something north of $40 billion, so super pumped about that.

On the Paramount deal, Page 12, when we look at Paramount, how do we think about this? So what I would say is when we started Rithm, which was formally known as New Residential in 2013. Our thesis back then was to take advantage of a dislocation in an asset class and build a company around that. At that time, the asset class that we focused on were mortgage servicing rights. So we ceded new residential at that time with $1 billion. We went out and bought hundreds and hundreds of billions of mortgage servicing rights from the banks. And from there, that was really the beginning of New Residential.

When we look at the Paramount Group, and this -- again, there'll be a name change there, so it's not confusing. But when we look at this company and you think about the dislocation in office and our ability or what we have at Rithm, which is no legacy office and a very, very clean balance sheet, we thought this would be the right time and the right asset class and the right team to be able to take advantage of a dislocated sector.

So again, what did we do? We went out, we bought a company for -- in competition with some of the largest office REITs here in the U.S. as well as some foreign investors. We bought a company where the going in cap rate is 7% and our acquisition basis is $585 a square foot. We're buying Class A office buildings in 2 gateway cities at a 40% discount to pre-COVID values and you just can't build these buildings and the replacement cost is a 75% discount to replacement cost.

One of the things that we get, and I'm going to turn over the narrative to Peter here in one second. One question we typically get when we're out there raising capital around this particular transaction is, well, who's the leadership. Paramount has 300 people, both at the building level and at corporate. When when we spend time and when I spend time with Peter and you look at the expertise we have in-house at Rithm and our operating companies there's a world-class operating company here at Paramount.

We don't need anything else when we think about how this company is going to run. Obviously, we're tweaking leadership, and we have done that. And when I -- when we look at the team today, we're super excited about where we're going to go with this company, where we're going to be able to add in the office space. And quite frankly, where we're going to add overall as an organization in the real estate space.

So super pumped about this. We do think it's transformational for us in the commercial real estate space.

With that, I'm going to turn it over to Peter, who's going to take over on Page 13.

Thank you, Michael. I'll start by saying Paramount owns manages and operates high-quality, centrally located Class A office properties in New York and San Francisco. The portfolio consists of 10 core assets totaling 9.9 million square feet, 3 noncore assets totaling 2.4 million square feet and 3 managed assets in New York totaling 600,000 square feet. The entire portfolio is approximately 13 million square feet.

In 2025, we leased more than 1.7 million square feet in our core assets, up 235% from 2024 and our highest annual total on record. Approximately 62% of our 2025 leasing velocity was on vacant space and space scheduled to expire in 2025. The balance of our 2025 leasing served to derisk future lease roll. At year-end, our core portfolio leased occupancy at share was 86.9%, up 220 basis points year-over-year. Our core portfolio boasts a weighted average lease term of 8.4 years for office leases with an average in-place rent of $90 per square foot.

Our tenant roster is comprised of best-in-class companies with significant industry diversification. The portfolio is largely comprised of financial services, legal, insurance, technology and media companies.

Turning to our leasing results on Page 14. In New York, at year-end, our New York core portfolio's leased occupancy was 92.8% at share, up 780 basis points year-over-year. During 2025, we completed 43 deals totaling $1.3 million square feet with an average lease term of 13.8 years. Our 2025 leasing includes 5 deals greater than 100,000 square feet, a testament to the quality of our assets and the strength of our team, as Michael alluded to previously.

With regard to the New York market, it just continues to gain strength. Manhattan has experienced the strongest return to office momentum in the country with visits to Manhattan office buildings nearing pre-pandemic levels. in-person work, coupled with strong earnings forecasted for U.S. companies in 2026 to power Velocity going forward in New York.

Return to work is no longer really a conversation work from home is in the rearview mirror in New York. The city has more energy than I think it's ever had, and it feels really good. In 2025, Midtown, which is predominantly where most of our assets are located, posted the highest annual total of new leasing activities since 2018. Robust leasing little to no new development over the next few years conversions of select buildings away from office and the ongoing reduction of available space will further improve Midtown's fundamentals going forward, and we expect will result in NER growth going forward.

Turning to our San Francisco leasing results. At year-end, our San Francisco core portfolio's leased occupancy was 62.2% at share, down year-over-year, driven largely by a couple of large known move-outs at One Market Plaza and One Front Street. We're in the process of adding market-leading amenities at each of these premier buildings and look forward to updating you on our progress in subsequent quarters. During 2025, leasing activity in our San Francisco portfolio increased by 330% year-over-year as we completed 16 deals totaling 411,000 square feet with an average lease term of 8.6 years. This represents our highest annual leasing total in 5 years and reflects the ongoing recovery in San Francisco. More broadly and with regard to the market in San Francisco, 2025 San Francisco recorded approximately 9 million square feet of leasing activity, strongest annual leasing total since 2019, this uptick in leasing activity contributed to the 310 basis point year-over-year decline in San Francisco's availability rate as tenants are increasingly reengaging the market and in many cases, expanding their footprint. At year-end, there were approximately 8 million square feet of tenants in the market, a pipeline that exceeds pre-pandemic levels and once again, a reflection of improving market conditions in San Francisco.

In 2025, San Francisco-based company has raised $134 billion of venture capital funding directed in large part to AI companies, which accounted for 143 deals totaling approximately 2 million square feet more than 20% of San Francisco's annual leasing total in 2025. Approximately 56% of this AI demand based on deal count originated from tenants that are new to the market further reinforcing San Francisco's growing importance as an AI hub. AI companies acknowledge the importance of the office and are becoming an increasingly large percentage of the demand profile in San Francisco. Bottom line is we remain focused on maintaining our great tenant and broker relationships, delivering market-leading hospitality, securing renewals, filling our vacant spaces, and infusing best-in-class amenities in our Class A assets to enhance our market-leading offering.

Awesome. Thanks, Peter. Just a side note on San Fran, I know when you look at the slide, it says 62% leased. What I would say in our -- as we form -- as we do our capital formation around this transaction, the amount of incoming phone calls we've had from folks that want to play the recovery. I'm not going to call it trade the recovery investment in San Francisco has been extremely significant and one of the things I'd also point out at Rithm, we made an early investment in debt in Columbia Property Trust on the debt side. So we've had exposure to San Francisco and have seen the growth in that in San Francisco since I think it was 2023.

So we have a really good feel to that market. I do think there's going to be a ton of money made there, Peter pointed out on AI. That's been like anthoropic has gone in and just taking down a whole new building. Just 1 other note, and then I'll talk about Genesis. When you look at this office portfolio, 1 of the things that we all know today when folks go to work in an office, they want a lifestyle. You can look at the JPMorgan folks that have done at 270, like they built this amazing building. We are doing a lot of the same things when we think about amenity packages in a number of our buildings.

So again, very, very excited about this investment and truly believe it's going to be a very good one for our shareholders in LPs. Just quickly for me on the Genesis, I then I'll turn it over to Baron, who will talk about new res. It's been a great business for us. We bought this from Goldman Sachs Merchant Bank going back to 2022. A liner Smith, who leads that organization. Press has done a fantastic job growing not only just growing the business and when you think about from an origination perspective and UPB, but sponsors, most importantly, credit matters. We see this when we look at companies all day long, delinquency trends and what you see with some folks that are truly in either whether it be an AUM rate or try to grow their origination business where they shouldn't be from an overall credit standpoint.

We've seen this in our careers many, many times. But when we look at the Genesis business and if you have a look at Slide 16, the team there has done just a great job. And that product is one of the hottest products in the marketplace. You'll see us expand our multifamily origination as well as our RTL origination as we go forward.

With that, I'm going to turn it over to Baron who will talk about Newrez and we're going to open up on Page 19.

All right. Thank you, Michael. Good morning to everybody. Newrez had a great 2025. And we're really excited about where we're headed in '26. We finished the year with a total pretax income, excluding mark-to-market of approximately $1.1 billion, which is a 17% increase year-over-year and a milestone for our platform.

Our fourth quarter pretax income, excluding mark-to-market was $249 million, driven by our origination strategy and our disciplined origination strategy. Our third-party servicing business and despite the impact of faster prepayment speeds, we delivered a 17% ROE on the quarter and a 20% ROE for all of 2025.

For context on speeds, the composition of our servicing portfolio is deliberate and reflects the balance between third-party servicing and owned MSR. Approximately 30% of our overall portfolio is third-party high-margin fee-based servicing, 18% of the overall portfolio or 26% of the owned portfolio are Ginnie MSRs of which approximately 1/3 were originated in the last 3 years.

Regarding our quarterly MSR mark-to-market, while our high-quality owned MSR portfolio continues to perform well, we saw seasonal increases in delinquencies and advances and the new FHA modification rule has increased immediate delinquencies to encourage long-term stability. Our mark-to-market approach has remained consistent with prior quarters and, in our view, conservative. Overall, these results continue to show the power of our platform and our ability to drive consistent earnings.

Turning to Slide 20 and regarding our 2026 technology strategy. Yesterday, we announced our partnership with Valent Technologies on our servicing operating system and 2 weeks ago, we announced our partnership with Home Vision for our underwriting decision engine. These partnerships are designed to upgrade our core operating platforms with AI as a fundamental core component rather than adding AI as an afterthought to existing structures. The first phase of our Home Vision rollout has already doubled our underwriting capacity with further functionality to be delivered throughout 2026. Our partnership with [ Valin ] began in 2019 with Rithm as 1 of their first investors and Newrez as their first subservicing client.

Michael saw the potential power of connecting new res with Valent to create game-changing servicing technology that will transform mortgage servicing. We expect the Valent operating system to materially improve our efficiency, benefiting all of our 4 million homeowners and our third-party clients. Both of these software partnership includes significant long-term minority equity ownerships that will continue to provide future earnings growth.

Turning to Slides 20 and 21 -- 21 and 22 and providing some highlights on our originations and servicing business. funded volume for the quarter ended at $18.8 billion, up 15% quarter-over-quarter and $63 billion for all of '25. And as Michael mentioned, positioning us as a #5 mortgage lender. The origination platform delivered fourth quarter pretax income, excluding mark-to-market of $126 million and full year pretax income of approximately $360 million, both up 31% year-over-year and 57% quarter-over-quarter. And while market competition continues to pressure gain on sale margins, we maintain pricing discipline did not chase market share, improving our margins quarter-over-quarter.

Non-Agency production remains a focus with year-over-year growth of 147% including non-QM originations, which were up 200% year-over-year. We also just launched our new crypto enhancement, where Newrez is the first major lender to recognize cryptocurrency, cryptocurrency assets for mortgage qualifications, especially important as 20% of U.S. adults own crypto today.

On the servicing side, our third-party servicing portfolio increased to $256 billion which includes $25 billion in new third-party servicing, which offset the movement of a single low-margin agency subservicing portfolio. The onboarding of the wells and Onity non-agency MSR portfolios begin March and the transition of the Valent -- to the Valent operating system will begin in 2027. I believe our business is best positioned as it's ever been, and I look forward to sharing the next chapter of the Newrez growth story.

So back to you, Mike.

Thanks, Baron. Just a couple of notes on the mortgage company stuff. Obviously, a little bit of noise -- I shouldn't say a little bit, but some noise around our equity got hit as did some of the other kind of mortgage companies over the course of the past few days. We don't -- we're not in a race to grow origination. We're not in a race to grow AUM unless we could make money.

So when you think about it, if folks are out there pricing origination through the market, it's not going to be us. So origination volumes will vary. Similarly, when you think about the MSR business, we're fully hedged against our MSR. I did point out we have a steepener on. But when we think about that, you are going to have some mark-to-market volatility in a quarter when rates move or mortgage spreads tighten. It's the nature of the business. You take a step back and you think about that as well as some of the things we're doing around the technology side, Baron pointed out Valent. Valent came to us years ago. We spent some time with them. We seeded them with a portfolio of loans on the servicing side. At that point, we took an equity stake in the company and if this thing plays out the way that we think it could and will, we believe that the sheer size of or the market valuation of Valent could be a substantial P&L contributor to our business from an overall market value standpoint as we go forward.

When you look at tech valuations and if this company is worth $10 billion, for example, that could be worth a couple that could be worth a couple of dollars a share. So I look at this based on equity ownership. I look at this, Baron pointed out the Home Vision side, we're going to get more efficient. We are going to spend some more money on brand as we go forward. But we're not in a race to do just grow origination. We don't need to do that just to be in a battle with somebody else. And you've seen that in the wholesale channel between a couple of different mortgage originators.

I'll wrap up and then we'll go into some Q&A. Just on the investment portfolio. When you look at the power of the franchise, clearly, we're doing -- we have a great origination business I do think our origination business and will continue to grow in different areas that we don't have there. That will feed into not only balance sheet and earnings, they also feed into the ABF space, which we're going to grow substantially. It is the one of the single hottest products that LPs want today. They're looking for diversification away from certain credit products. When you look at valuations and you think about the absolute returns of being able to get low double-digit returns backed by real cash flow and in many cases, hard assets. It's a space that not only have that we have expertise, but we've been doing this our entire career.

I pointed out earlier, we did $4 billion of securitizations. We invested $9 billion in different assets in the Resi space. Most of that is through our own origination quite frankly. We did the upgrade transaction where we sourced $1 billion of home improvement loans. We're going to continue to grow there. We're going to grow our third-party business as well as we continue to expand our sourcing capabilities.

So overall, before I turn it back to the operator for Q&A. The company is in very, very good shape. I do think, and I say this every earnings call, our valuation is is extremely low relative to what I think we do and what we offer both our LPs and our shareholders. We're focused on making money for our LPs and shareholders first before we do anything else. That will enable us to grow. At some point, the company will get revalued and we look forward to continuing the journey and growing the business.

With that, I'll turn it back to the operator for Q&A.

[Operator Instructions] Our first question today comes from Crispin Love from Piper Sandler.

First, just looking at your funded volumes, purchase versus refi, refi made up 40% plus for you in the quarter. I think that's the highest level for several years, at least on a percentage basis. Can you just detail that a bit were those competitive takeaways, recapture on your own book? A little color there would be great. And then just expectations into the first quarter, thoughts on overall volumes relative to 4Q, just given recent mortgage rate moves.

Yes. So look, we are a large correspondent buyer. So what you're seeing is a reflection of the market. You saw the rally in late summer and in September and that you saw the refi volume picked up, and you see that in speeds overall going into the fourth quarter. And that's really kind of the measurement for what you've seen for refis going up. And then just going into January, Michael referred to what we call the Trump bump, so you saw kind of spreads tightened and then you saw the pickup in production coming into into the month of January. And I think you'll see that when our numbers come out in -- at the end of the first quarter.

And what do you think regarding just getting to Crispin's question, production for Q4, let's just go '26?

Our forecast for '26 is going to be up. We think we're going to be up around where the market is estimating, which I think is approximately 10%. I do think, Crispin our internal view is that as we continue to connect with our homeowners as we continue to deliver better and faster service for them and better tools that will continue to basically improve and pick up market share.

And Crispin, part of this goes back to the investments we're making on the marketing side. We speak about AI. We speak about bringing in some new talent who are going to help lead certain divisions who are leading certain divisions. I think all that's going to help on the recapture side. So somebody doing this, we built Mr. Cooper when we were a fortress, we know what refi recapture numbers should be I don't think there's a real -- I mean, we can say there's a science, but you just have to be really good at it. I think we're really good at it because we have really good experience. While saying that, if you go into any kind of cycle thinking you're the best, you're going to be the loser and we don't always think we're the best. And we're going to invest both resources, capital to make sure that our refi numbers or recapture numbers, I should say, continue to go up. But the market is going to give you what the market is going to give you.

Great. I appreciate all that. And then Michael, you alluded to it, but can you discuss competition in the mortgage space, definitely been a popular topic just from some competitive results in the last few days. Gain on sale margins have been lower from a lot of others out there, but your holding well actually expanded. Just what's your view there? Are you seeing mortgage players being irrational in the fourth quarter and today?

Really asking me to comment on an earnings call if mortgage players are being irrational. I don't know if anybody's been irrational. What I would say is it is a competitive business. It always has been. You're going to see more origination certain players are -- they're more aggressive. It doesn't mean they're going to make more money. The one thing I would say about our company and when you look and Baron referred to amortization and as we look at where we are, the breadth of the company, when we were able to put up a $400 million quarter in Q4, and quite frankly, when you look at the MSR business, take a little bit of a more conservative approach, I think, Q4 because we could is something that really differentiates us.

So when we look at the competition and we think about our friends in the space who are -- who just want to grow origination, we don't -- we're not -- it's not going to be us. we want to keep all our customers on our platform for sure. We're going to do that through refi and recapture. But the government has come out with some changes as well, right? I mean when you look at the Ginnie program, that's why you saw a small spike in delinquencies in the fourth quarter. We do think a lot of that, if not all of that, based on a 430 10-year note and call it a low 6 mortgage rate will reverse here in the first quarter.

So we expect to see that mark-to-market actually go the other way here in the first quarter. But as it relates to the broader mortgage business and originators. There are some folks that are bidding, what I would say, real competition for many, many years on the origination side. That hasn't been us and it's not going to be us. So there's a lot of levers that we can pull that make our shareholders in LP's money. We'll continue to do that without getting into a race.

Our next question comes from Bose George from KBW.

Just wanted to follow up on the gain on sale margin. On the retail channel specifically, there was a pretty good increase this quarter. Last quarter, you guys noted that I think it was [indiscernible] refis were driving some of the decrease that you saw in 3Q. So just quarter-over-quarter, fourth quarter over third quarter. Just curious how much of the improvement was mix versus kind of an apples-to-apples improvement by product type?

Yes. So it's definitely mix is always a driver, right? You saw our correspondent share, which was hovering around 70% is now, I think, 62% for the quarter. as we pick up our production overall in our consumer direct channels. And then I would tell you, look, we felt like we were able to kind of maintain our margins overall. But then you also have what I would just say is from a timing perspective, some of the timing of completion accrual, but also how we basically book our MSR recapture is driving what you see is a little bit of that increases in our margins on the consumer direct channel.

Okay. Great. And then actually on the wholesale side, you guys alluded to the competition in that market. But then when I look at your numbers, volumes are up by 1/3, your wholesale margin is up pretty meaningfully. So can you just kind of tie the 2, I guess, it did not impact your performance?

Yes. So look, it's driving to our mix. Michael talks very much about us not chasing market share. So if we don't like where pricing is on, say, conventional or government product. But our focus is on non-agency and we continue to grow on our non-agency and driving our non-agency production through wholesale. It's a really important channel to us. We're looking to basically try to expand as much as we can, but stay focused on and be disciplined on our margins.

Yes. Just 1 further comment on EPOS. When you look at the non-agency space, and I brought up the so-called ABF space in the fundraising side or on the LP side. The ABF space, asset-based finance base is the hottest thing that any asset manager is going out to talk about our ability to differentiate ourselves where we could actually originate these loans and service these loans gives us a real edge over a lot of competition. So you're going to continue to see, I think, the non-Agency space grow. We just got to make sure that not just on us, quite frankly, as an industry, we maintain discipline around credit here.

Our next question comes from Doug Harter from UBS.

Can you talk about [indiscernible]

[Operator Instructions] are you able to hear me, sir?

Yes, I think we lost our queue.

Yes, sir. We're getting people back in now. While we're waiting for Doug to rejoin, I can join in Eric Hagan from BTIG.

So if the expectation is that you could remain in this REIT structure for the foreseeable future, but obviously, the clear focus is on growing your asset management at the same time. How do you think that affects your capital allocation plans? And if it ever looked like you could shed your REIT status, would that maybe catalyze a change in capital allocation in any way across the segments that you guys manage.

It's a good question. It's something that we get asked all the time. We're very focused, obviously, on our capital structure, as you know, at some point, we do need to be a C-corp. We need to grow our asset management business a little bit more. I don't think that's going to take away from the way that we run our business where we try to drive higher earnings for our shareholders and obviously, better results for our LPs. The -- where our FRE continues to grow as an organization. But like I said, we're going to lead with performance first. They'll be -- I'm sure, at some point, there'll be some kind of opportunity to actually grow FRE, which at that point then probably gives us the ability to have a separately listed asset management business. We do toy with and I don't use the word loosely, but we think about the mortgage company and should we have a separate track mortgage company, which kind of simplifies the story a little bit. We also own -- or actually, we manage Rithm Property Trust, which we're exploring some capital formation around that organization as we build out more in the commercial real estate space.

So there's a bunch of moving parts. And one thing I would want every analyst and everybody to understand is we're focused on performance first, which includes earnings for our shareholders and LPs. When you think about the company today, we have about $8.5 billion of permanent capital. The company makes north of $1 billion in pretax and we trade at whatever 6x or something like that. Real Asset Management business just trade anywhere from 10 to 30x. You look at the heavier balance sheet concentrated asset management firms, which trade south of there. But there's a ton of upside in our opinion, to grow, but the corporate structure or the REIT space as we think about the way that we currently run is something that will change over time.

That doesn't mean we're not going to have a REIT. You look at Blackstone, they got BXMT, Blackstone and C-Corp on top. So I say this every earnings call, I would expect at some point we get towards that. We're not going to be Blackstone, but there's -- the corporate structure works.

Yes. Great stuff. Do you guys think there are combination opportunities for Genesis to essentially apply the same playbook that you just did for Paramount, where you have this synergistic platform that you can raise capital around to support the acquisition. I mean maybe a better question is like within the various strategies that you guys do manage where do you think you can apply that playbook or you raise capital for the asset manager, which gives you scale that you can plug into with another business that you also manage at the same time.

Well, it's a great question. That will be at the Rithm Property Trust, what you're going to see is we're going to originate more multifamily loans into RPT or Rithm Property Trust, that capital base will continue to grow. So when you look from a market -- from an overall equity standpoint, Rithm Property Trust, which is an externally managed vehicle where Rithm owns 1.5 and 2 over 20 over 8, I believe it is -- we will raise capital around that. That balance sheet will grow through a lot of these so-called Genesis origination as well as third-party origination.

So when you think about it, it's a permanent capital vehicle, -- we've done this with new residential in the past where we -- again, we started with $1 billion of capital now $8.5 billion. It's now you look at Blackstone, they started BXMT with a small amount. They did a transformational -- a couple of transformational deals to actually grow that. We're going to do the same thing with RPT and that will be fed by Genesis.

And our next question once again is from Doug Harter from UBS.

Good, hoping you could give us an update around the capital raising for Paramount? And when -- how we should think about the magnitude and the structure of that?

It's a little bit fluid. Quite frankly, we closed Paramount at the end of December. We're exploring whether we raise -- again, we funded it on a third-party balance sheet. We did a pref offering in the quarter at the Rithm level where we raised $250 million of permanent capital in the pref market. We're in no rush, quite frankly, to turn around and to say, okay, we have to do a fund or we're going to bring in JV partners. In the real estate world, when you look at the commercial side, a lot of folks bring in partners. So we're exploring both. We're on the road thinking about what's the best structure. We do want to expand, as I pointed out, when we bought this or announce this deal. We want to expand our relationships and partnerships with LPs in the commercial real estate space. That continues to be the primary focus. I think you'll see a combination of both fund raises permanent capital raises as well as JV partnerships. So it's fluid is what I would say.

Great. And any just sense as to the timing, like how we should think about the timing? Is there -- how do you think about wanting to free up the capital to redeploy versus kind of making sure you got the right structure.

Yes, we closed the quarter with $1.7 billion of cash and liquidity. So we're not -- what I would say is we're not fussed with the capital at this point. While saying that, we pay -- we're a dividend payer, and we always want to -- we always spend money we do shop.

So when you think about it from that perspective, it's now where the teams are now -- the 1 thing I didn't mention to the group is we have a couple of key hires in the asset management business as we continue to grow that. and we'll be putting on a press release here over the next week. One of them is a former partner of mine from Fortress, who will help us on the lead the asset management business along with our other partners at the different organizations. And then we hired an old I'm not an old colleague, but somebody that's highly recommended that comes, that had retarded from Blackstone to help on leading the Capital Formation business.

So we have some significant hires on the asset management side. I think you'll continue to see us grow. But like I said, the most important thing is we got to perform for LPs -- once we do that, we'll grow exponentially.

[Operator Instructions] Our next question comes from Giuliano Bologna from Compass Point.

[indiscernible] performance. When I think about some of the commentary you just gave on the asset management side and the C-corp. you've obviously grown the asset manager tremendously. Obviously, rolled many acquisitions integrated them well over the past couple of years here. Is there a sense of scale that you're going to achieve because you're obviously getting much closer to large scale -- large-scale alternative asset manager within that segment? And is there a profitability target or kind of a rough threshold that you want to be before you try to turn that into a [indiscernible].

I'd say there's no amount that we have in mind, I think, is what the market expects. So when you look at -- even just taking a step back and when you say about scale, when we go see NLP, and LP wants to do business with fewer institutions but want to have more products. When you think about our credit business now between scope through Crestline and Rhythm, we have all the products we need on credit. We have all the products we need on mortgage. We have all the products we need on on ABF.

We have all the products we need in commercial real estate. But I think it is more about -- it's really about the FRE and how you're going to get valued and make sure that these organizations are sizable enough so they don't trade by appointment is what I would say. So it's not like -- and I say this, we're never going to be Blackstone and we want to be who we are. We want to grow prudently, and we want to be valued with the best of the best. And that's really what we're out for. It's like how do we get valued in a different way than we currently get valued -- and I think there is no set amount. I would expect over the next year, we get to that point, but I don't know what that size is going to be, Giuliano.

That's helpful. And then maybe going over to the mortgage side I think about sale, I'm assuming there's probably some positive lift from some of the recapture in the consumer direct channel. -- just thinking about the amount of leverage that you have on that side, especially as recapture should continue to lease in the near term, do you that should continue to be a driver of stability for your gain on sale margins on a consolidated basis?

Yes, absolutely. Michael talked about us continuing to drive our brand connecting with our customers, right? It's -- we have 4 million customers on our platform and making sure that we stay connected as best we possibly can. They're going to continue to be a key driver for our business, our growth strategy on our platform overall.

[Operator Instructions] And ladies and gentlemen, at this time, we do have an additional question from Bose George from KBW.

In terms of recapture expectations in the market, I mean, do you think recapture expectations embedded in some of the servicing transfers that have happened or even in the correspondent channel are potentially a bit high.

I don't I mean I don't know what the expectations are from different folks. What I would say is, again, going back to my fortress days in our fortress days, we built what is now known as Mr. Cooper, along with Jay and his team, obviously, we know what recapture percentages are. I do think the world has gotten more efficient. I think with technology, it's only going to get more efficient. We alluded to the Valent partnership. We spoke about Home vision. That is going -- those kind of things will help, and I think the mortgage industry will get more efficient. I don't -- you're only going to be as good as what the market is -- it's a very competitive space. People do things that are not economical. That's not who we are. But while saying that, we do want to keep our customers. I can't tell you if other folks assumptions are too high or not. I think you should speak to them about that.

Yes. Well, I want to thank everybody for dialing in today. We appreciate your support. We have -- I was going through my notes last night and I looked at the amount of times I was using the word great or terrific or wonderful and I was looking for more adjectives. And the one thing you'll get from us, we're not going to show up in a meeting or tell you that we're the best in anything that we do because if we take that approach, we're not going to be the best. But we always have things to learn. While saying that we have a very, very good company, and we care first about driving results. And with that, hopefully, we get a much better result on our equity price, and we'll continue to do the same thing we've been doing for our shareholders.

So thanks again. Look forward to updating you throughout the quarter and on our next call. I appreciate everybody dialing in.

Ladies and gentlemen, we thank you for joining today's conference call and presentation. You may now disconnect your lines.

Good morning, and welcome to the Rithm Capital Third Quarter 2025 Earnings Call. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Emma Hoelke (sic) [ Emma Bolla ], Associate General Counsel. Please go ahead.

Thank you, and good morning, everyone. I would like to thank you for joining us today for Rithm Capital's Third Quarter 2025 Earnings Call. Joining me today are Michael Nierenberg, Chairman, CEO and President of Rithm Capital; Nick Santoro, Chief Financial Officer of Rithm Capital; and Baron Silverstein, President of Newrez. Throughout the call, we are going to reference the earnings supplement that was posted this morning to the Rithm Capital website, www.rithmcap.com. If you've not already done so, I'd encourage you to download the presentation now.

I would like to point out that certain statements made today will be forward-looking statements. These statements, by their nature, are uncertain and may differ materially from actual results. I encourage you to review the disclaimers in our press release and earnings supplement regarding forward-looking statements and to review the risk factors contained in our annual and quarterly reports filed with the SEC. In addition, we will be discussing some non-GAAP financial measures during today's call. Reconciliations of these measures to the most directly comparable GAAP measures can be found in our earnings supplement.

And with that, I will turn the call over to Michael.

Thanks, Emma. Good morning, everyone, and thanks for joining the call this morning. Our company had a great quarter with all of our business lines performing extremely well. Our market-leading business lines that enabled us to get here, Newrez, our mortgage company, which is one of the largest mortgage companies in the U.S.; Genesis, our construction lender, which is one of the largest nonbank construction lenders in the U.S. and our investment portfolio and team all had a really good quarter.

As we look at all the business lines that we built or acquired, this enabled us to generate approximately $300 million in earnings for our shareholders, generating an 18% ROE. We ended the quarter with $2.2 billion of cash and liquidity. During the quarter, we announced 2 acquisitions: Crestline, which is a credit manager based out of Fort Worth, Texas; and Paramount, which is a large real estate office REIT here based in New York City with properties in 2 of the gateway cities in the U.S., both New York and San Francisco.

So we are clear, we will not be raising equity in the capital markets to fund these acquisitions. We will fund these acquisitions with a combination of balance sheet and third-party LPs and partners. The capital created by these business lines help us expand our platform. When we see an opportunity to acquire a company or an asset that helps expand our product offerings to our LPs, we try and take advantage of these types of situations.

We are really excited with these acquisitions. Crestline is an $18 billion to $20 billion asset manager with great people, great investment professionals offering direct lending, NAV lending, credit products. They also have an insurance business and a reinsurance business. So now we're in the insurance business. The suite of products that we have across our firm at Rithm and our subsidiaries enable us to offer a wide spectrum of credit and ABF products to our LP base and quite frankly, put us on the stage to be able to compete against anyone.

Our mantra of performance first will enable us to grow our platforms. We are not, to be clear, in an AUM race. More importantly, what we want to do is lead with results. When we meet with LPs, they want fewer managers with more products, and I believe we are in the middle of accomplishing that.

During the quarter, as I mentioned, we also announced the acquisition of Paramount. Paramount is a Class A office REIT with a great portfolio of office buildings in New York and San Francisco. There's 13 properties there. We are seeing huge demand for office in both New York City and the recovery in San Francisco has already begun. Acquiring assets for a little under $600 per foot versus replacement cost of $2,500 to $3,000 a foot gets us really excited. In New York, this portfolio is north of 90% leased. And in San Francisco, it's in the low 70s, creating a huge opportunity for us to grow NOI. When you look at the Paramount portfolio, not only will we grow occupancy, we also believe in the ability to drive rents higher as the average rent is approximately $85 per foot.

For example, when we think about the need for office space, Rithm and our affiliates have a need for 100,000 of new space. It's very, very difficult to find space and average rents are well above the $85 per foot that I quoted in most markets for A quality office space. During the quarter, Paramount released their earnings last night, and I believe there's a couple of other REITs that released earnings. We're seeing some of the highest leasing activity that we've seen, and this goes back to the pre-COVID days.

As it relates to Paramount, they have an excellent team of professionals who have been running the company for many, many years and as well as the operations. I believe there's approximately 300 people between corporate and ops. We're very excited to work with the team, creating what we believe will be a terrific investment return for our LPs and shareholders. So as we look forward, our mission is still the same, put up solid results quarter after quarter, be able to offer more products to our LPs and partners and take advantage of opportunistic situations to generate outsized returns and grow the company.

I'll now refer to our supplement, which has been posted online, and I'm going to begin on Page 3. If you look in the upper part of the page, Rithm by the numbers, balance sheet, $47 billion, Sculptor has $37 billion of AUM. Crestline has $18 billion of AUM and Paramount has a $7 billion portfolio. So when we think about this, we think about it in the context of having a little north of $100 billion in investable assets. And between the investment teams and that work on our balance sheet as well as putting up great results for our LPs, we're really excited where we sit today and where we're going.

When you think about Rithm, very few companies have $8.5 billion of permanent capital. We're proud of that. We've grown this company in the public markets when we began this company back in 2013 at Fortress. The average investment team or the average age of the investment team, not age, but been working in the investment business has been 31 years. When you look at the bottom part of the -- you can see all the portfolio companies, Newrez, again, we're one of the top 5 mortgage companies in the U.S. Sculptor has been around for 30-plus years, great track record. The real estate team is just coming off a very successful capital raise, raising north of $4 billion for their business. Their brand is second to none in the real estate business.

Crestline, super excited to work together and help support that organization. Paramount, I mentioned on the real estate side. Genesis Capital, just to give you on that one, we bought that company from Goldman Sachs in 2022. At that time, it was doing $1.8 billion of production. This year, I think we're going to either approach or do north of $5 billion of production and EBITDA numbers have gone from $40-odd million to $120 million this year expected. And then we have Rithm Property Trust, which was the broken REIT we took over last year, which was known as Great Ajax. We're still trying to figure out a way, quite frankly, to grow that and put the right assets there.

As we look at financial highlights on Page 4, a really good quarter, and it's solid. All of our business lines contributing here. Earnings available for distribution, $0.54 per diluted share. This is the 24th consecutive quarter where EAD was greater than our dividends paid. GAAP net income, $193.7 million or $0.35 per diluted share for return on equity of 11%. Keep in mind, that includes all the mark-to-market stuff. Earnings available for distribution, again, $297 million, $0.54 per diluted share or 18% return on equity. Book value, we closed the quarter at $12.83, which is $7.1 billion; dividend, $0.25. And as I pointed out before, cash and liquidity on balance sheet, $2.2 billion.

As you look at Page 5, quarter in review. Once again, we've demonstrated steady growth year-over-year in all of our segments. During the quarter, as I mentioned earlier, we entered into a definitive agreement to acquire Crestline on September 3. We're hoping that deal closes on December 1. We entered into a definitive agreement to acquire Paramount on September 17. That will go out for shareholder vote, and we're hopeful that closes in mid-December. These acquisitions continue, as I pointed out before, to expand the product offerings that we have to -- when we sit down with an LP, we have a larger suite of products because LPs want fewer managers. And now with between Sculptor, Rithm, Crestline and some of the real estate stuff we're doing, we have a large amount of products that we could offer to our different clients.

Fundraising across the platform, we continue to work hard to build that during the quarter. In Q4, we expect to close our first evergreen ABF fund on a leading wealth management platform. And then when you look at inflows, Sculptor continues to see some good inflows into their business. Bottom part of the page, Genesis Capital during the quarter, originated $1.2 billion of loans. That's a 60% increase year-over-year. We saw 71 new sponsors in -- what I would say on that company, credit first is the mantra. It's not again just to grow, but credit first really matters.

The mortgage company, Baron will take us through the mortgage company, but Baron and the team continue to do a great job there. And as the world changes and we think about AI and innovation, we're doing all we can to stay ahead of that. And then on the investment portfolio, during the quarter, we agreed on a forward flow to acquire up to $1 billion in home improvement loans. That's from upgrade. We did a securitization for a little under $500 million on non-QM, and we invested $2.6 billion in non-QM loans and residential transition loans, and that's through our Genesis brand.

When you look at the -- hello. When you look -- I'm on Page 6 now. When you look at the -- our M&A update, what we wanted to do is put a page in here so you could have a sense for our liquidity walk. As I mentioned, cash and liquidity as of the end of Q3 is $2.2 billion. Here, it shows -- what are we showing here. Sorry, why don't you take it?

Sure. So at the end of the quarter, we ended with cash and cash equivalents on balance sheet of $1.6 billion. Then just rolling it forward, we have the Crestline acquisition and the Paramount acquisition. The amounts shown here are the expected cash outlays or uses at close, net of excess cash on the respective balance sheets of both Crestline and Paramount.

Then we have our use of cash, which comes from -- our source of cash, which comes from drawing down on our financing facilities. The expectation is at close, we will have approximately $1 billion of financing available to us. bringing us down to $1.3 billion of cash and cash equivalents post both the Crestline and Paramount transactions. And that $1.2 billion is well north of our regulatory requirements as well as working capital and what we hold for margin requirements.

Thanks, Nick. On Page 7, as we look at the -- again, this is something that we talk about quarter after quarter, the valuation of our company. We try to show the sum of the parts. When you look to the top part of the page, Rithm gets valued similar to mortgage REIT peers. We think there's a huge amount of upside for us to be able to unlock value. That is going to be driven by our asset management business as well as by the mortgage company.

If you look at most mortgage companies today or if you look at what I would call our peer group, they trade anywhere from 1.5 to 3x. Right now, Rithm as a public company is trading call it, something around upper 0.8 to 0.9x. If you think about the mortgage company getting valued properly, you think about the asset management business, even trading at 10x, the following slide on Page 8 will show you a range of outcomes, which we believe we will achieve over time of something between $16 and $23 as we compare ourselves either to different asset management firms or when we look at the valuation of our mortgage company and our Genesis business.

With that, I'm going to now flip to Page 10, which is the so-called power of our platform. As we pointed out before, a little north of $100 billion in assets. You can see all the different product offerings that we have right now to show out to our LPs and clients in corporate credit. There's really nothing more that we need when we look at corporate credit. We will be exploring over time the energy space, obviously, a very important space. Right now, there's nothing for us to do there. At Sculptor, there's the multi-strat fund. Our real estate business continues to grow. And ABF is something that is near and dear to our heart, and that's something that we think is going to be extremely scalable for us as an organization across all of our business lines. As I mentioned earlier, we expect to close one of our first ABF funds here in the fourth quarter, and that's on one of the large wealth platforms. And then we have a couple of other things that we're working on there.

Page 11, Crestline, just gives you a quick snapshot of that business. Again, $18 billion of AUM acquired in September, was founded in '97, headquartered in Fort Worth, offices in New York, Toronto, London and Tokyo. Really great brand. The team there led by Doug Bratton and Keith Williams, do a fabulous job. They have a great NAV lending business, a great direct lending business. They're really good on the credit side. And we think from a firm standpoint on the capability between Crestline, Sculptor, Rithm, the DNA of the firm and what we have to offer should put us really in a very, very good position with our LPs. From an employee standpoint, there's 175 employees. Average experience of the management team is 20-plus years, and there's 700-plus investors across all the strategies.

On Page 12, just gives you a couple of snapshot on the different funds that we have to offer or that Crestline has to offer the investment professionals associated with them. The thing I mentioned in my opening remarks, we are now in the insurance and reinsurance business. That is a business that we intend to grow over time. Obviously, very, very competitive. But now that we have a licensed entity, we're super excited about where we could go with that.

Page 13, Sculptor. This is our snapshot that we put in each quarter. Results have been great. Team is doing great. Real estate guys, guys and gals recently raised north of $4 billion in their latest fund, very well-received brand there in the markets with, again, great results and leading with performance first rather than just AUM growth.

Page 15, we talk about the Paramount deal. The rationale for us here is pretty simple. One is, I think we're really good at developing a thesis or a theory around an investment strategy in a dislocated market. If we start with that, then when you have a Board that announces a process to sell a company that usually the way that we believe or we think about it, it creates an opportunity for us to have a hard look at that company.

When you look at the job that the Paramount team has done and the portfolio of assets that they have assembled, our belief is the so-called return to office. And you could actually poke holes at that a little bit because when you look at New York, it's 90-plus percent leased up. So you could say, okay, that office, New York has already returned to office. I mentioned here that between Rithm and our affiliates, we need 100,000 feet. It's really, really hard to find good office at any kind of what I would call reasonable value.

So we think about that. San Fran is in the middle of the so-called AI boom. You're seeing you have a new mayor there. You have a lot of folks coming back to the office. That portfolio is about low 70s from a lease-up perspective. We think we're going to be able to put in some amenities, put in some TI dollars, and we're going to see some really good lease-ups there. And we're seeing that now across all of our -- all the leasing activity.

When you look at San Francisco, the demand for tenants right now is roughly 7.8 million square feet, which is the highest ever that we know of. So really excited about this. Buying assets that we think attractive or acquiring a company at an attractive value with great assets then being able to raise third-party capital around that and grow our asset management business is really where we want to go with this.

Page 16, just a snapshot of the balance sheet. Pro forma after we do these transactions, you can have a look at that. I'm not going to spend time on that. Again, that's on Page 16. And now I'll just touch base on Genesis, and then I'll turn it over to Baron, who will talk about Newrez.

On Genesis, as I mentioned, $1.2 billion, a record third quarter for the business, new originations yielding roughly 10% of funding, 71 new sponsors. When you look at the company year-over-year, our outstanding commitments have grown by 51% quarter -- year-over-year in the third quarter. Funded volume up 60%, sponsor growth up a little less than 50%. And from a delinquency perspective, as I mentioned earlier, credit first, total portfolio has only 4% that are 60-plus days. Just keep in mind, we do service our own assets. I think that is a huge edge, whether it be an ABF or anything else that we do. And for the most part there, we're able to control an outcome and work with borrowers where we have some brand recognition.

When you look at Page 19, we just talk about a differentiated model versus so-called other peers in the business between construction, bridge and renovation. The business is led by Clint Arrowsmith and Clint is -- his background is really a bank credit guy, and he's -- and Clint and Joe and the team have done a great job there. So real excited about where we sit.

I'm going to turn it over to Baron now, who's going to talk about the mortgage company, and then we'll open it up for Q&A.

Okay. Thank you, Michael. Good morning to everybody. Just turning to Slide 21. Another great quarter for our platform as we execute on our 2025 growth strategy, significant gains in recapture, non-agency originations, expansion of our client franchise and as Michael mentioned, exciting market-leading developments in our ReziAI stack.

Our third quarter '25 pretax income, excluding mark-to-market, was approximately $295 million, which is up 7% quarter-over-quarter and 20% year-over-year and delivered a 20% ROE for the quarter, continuing our steady performance. These results continue to show the power of our platform and our ability to drive consistent earnings with the results first ethos.

On Slide 22, we can also continue to deliver growth through our differentiated multichannel origination strategy that allows us to use capital efficiency efficiently and maximize our returns. The table on the left shows our direct origination production up 32% year-over-year and with a focus on supporting our homeowners and recapture is outperforming the industry. In our correspondent channel, we were able to increase production and materially improve margins quarter-over-quarter from 43 basis points to 53 basis points through our co-issue MSR acquisition strategy. And our product expansion fueled growth in non-agency assets, which are forecasted to be up approximately 120% year-over-year.

Moving to Slide 24 (sic) [ Slide 23 ] and with the recent drop in rates, our origination business finished the quarter with our biggest month in lock volume since early 2022 and has already surpassed this month in October. But even with increased production, our technology is driving increased underwriting capacity and improved turn times. On margins, our weighted average margins dropped to 114 basis points, which is due to channel mix and a significant increase in government streamline refinances that have a lower margin. And while our market competition continues to drive margin pressures, our disciplined focus remains on profitable growth with an eye for market opportunities. As Michael said, performance first lead with results.

Turning to Slide 24. We continue to deepen our connection to our 4-plus million customers with digital and brand investments driving our momentum and recapture. We have seen wins in increased digital application leads, better conversions through our ReziChat and our newest tool, ReziAssist, powering loan officer call automation and coaching. Customer retention remains a top growth strategy for Newrez, and we're committed to delivering exceptional customer experience and a broad suite of products that differentiate our platform versus our competition.

On Slide 25, our servicing business continues to perform well with $260 million of pretax income, which is up 11% year-over-year. Our special servicing platform is the best in the business, and we continue to gain market share as shown by increases in our third-party UPB, which is up 4%. We're also excited about a new partnership with Wells Fargo, which validates our non-agency servicing leadership in the industry. Performance across the servicing platform is also driven by our operational efficiency and our expansion of our ReziAI platform continues to deliver cost leadership at a fully loaded $140 cost per loan.

I continue to believe our business is as best positioned as it has ever been, and I look forward to sharing the next chapter of the Newrez growth story with all of you. Thank you. Back to you, Michael.

Thanks, Baron. Just real quick on Page 27, then we'll open up for Q&A. When you look at the investment business and the investment portfolio, obviously, we always have a lot of things going on here at Rithm. During the quarter, as I mentioned earlier, we put out -- we did about $2.6 billion in investing in non-QM loans and RTL loans. These 2 segments, when you think about the so-called ABF world and whether it be us marketing ABF funds and other folks marketing ABF funds, these are 2 of the hottest products where -- what LPs want to get access to.

The fact that we could actually manufacture these products, we service these products. And when you look at the overall yields and returns on these assets is an area for us that we believe we're going to continue to grow. So I point that out from the Genesis side, I pointed out from the Newrez side. But overall, investment portfolio, a very good quarter. The firm overall had a really good quarter.

And with that, I'll turn it back to the operator for Q&A.

[Operator Instructions] Our first question comes from Crispin Love with Piper Sandler.

Just first, there's been a pretty wide divergence in share price between you and some of the originator servicer peers out there. It doesn't make up a whole ton of sense when you look at the sum of the parts that you lay out. So wondering if you could provide an update on the broader strategic vision and what time lines that could be, whether it's a Newrez spin, the REIT, anything with the asset manager. Just curious what's your focus? And then what are the key hurdles you need to get past to drive some of those changes?

Thanks, Crispin. I mean what I would say in our share price, and we say this quarter-over-quarter, I believe that fundamentally, when you look at the so-called sum of the parts that we are extremely attractive from a value standpoint. I think when we announced the Paramount deal and we did our Paramount call, I believe the stock traded towards $12.5. And then after that, I think the market thought we were going to come back and we rebooted our ATM. We did a pref offering, and I think the market thought we were going to raise equity. So when I look at the stock price today in and around $11, and I think it's extremely attractive, but that's just my thoughts.

Being that we're really clear, we're not raising equity around this transaction for these assets. Nick went through the balance sheet. We'll end up with about $1.3 billion of cash and liquidity to the extent that we funded both of these on balance sheet, it's likely we will. And then we're in a ton of conversations, what I would say, with LPs and our asset management business continues to grow. We need to drive more, quite frankly, more FRE through our pipes to get revalued. That's something that we're very focused on. We think that the Paramount deal will help towards that a little bit. I mentioned that we have an ABF fund that will close -- most likely have a first close in the fourth quarter here on one of the wealth management platforms. Crestline, the Crestline addition that will drive more FRE to the platform.

Sculptor is doing well. So I think all these things are going to help contribute. As you think about spins, sells, what have you, the mortgage company alone, when you think about it, if there's what, $5.5 billion of capital and that trades at 1.5 to 2x, you have 550 million shares, that gets you to kind of a mid- to upper teens stock price alone. So part of our thesis also is as we drive more -- as we make more money as an organization, we're in the build mode. And unfortunately, you don't get credit for the build mode than you do for, just saying, okay, the mortgage company, we're going to take it public. It's going to trade at 1.5 to 2x book, and that's a $17 or $18 stock price.

I think we need to grow asset management business. We need to grow FRE. Once we do that, we could think about spins or taking the mortgage company public. It's something that we think about all the time. From a REIT perspective, and I've used this example before, when you look at, for example, Blackstone, right, they have their C-corp. They've dropped their REIT down below. They have funds, et cetera. We'd like to do something like that, but I think we need to grow a little bit more on the asset management side first, thus the 2 acquisitions in the quarter.

Great. And then just on the Paramount transaction, can you share how much third-party capital you've been able to raise there or just how conversations have been going? I believe you said originally, you'd fund it with $300 million to $500 million in cash at the Rithm level and then the rest from co-investors. So curious on progress there. And then are you not able to bring in capital until after the closing of the deal? I thought I saw something like that in the presentation, but just curious on an update.

So on that deal, we went out to say that we'll put in $300 million to $500 million of our own equity. I think the way that we expect that to be, it will be roughly -- I think it's going to be roughly $300 million from Rithm, possibly $50 million from RPT, which is our other externally managed REIT. The other, call it, $950 million or $1 billion were raised from third parties. We can raise all that money prior to close depending upon how much economics do we want to give away beforehand.

I mean it's just that simple. The money is there. We've had a number of conversations with folks that want to give us the money now. What we're trying to do is really build our asset management business. We did set up from a liquidity standpoint prior to this acquisition and prior to Crestline to make sure that there is enough cash and liquidity on balance sheet. But just to be clear, if we want to fund this thing all with third parties now, we can do that. It's just a question of what do the economics look like for Rithm and our shareholders.

And the next question comes from Bose George with KBW.

Actually, a question on the Ginnie Mae streamline refis where you noted that took the gain on sale margin down. Are those loans just cheaper to produce as well? Just -- so the economics are similar, it's just that the top line gain on sale margin is different?

Yes. Yes. The answer to that is yes. They are definitely cheaper to produce, and that's the best way. They're also highly competitive as well, but they're cheaper to produce.

Okay. Great. And then actually switching to RPT. Given where that's trading, can you just discuss some of the options there for potentially growing that business? Could we see sort of an acquisition or a merger? Just curious what kinds of things you're thinking about there?

So on RPT, we have earnings tomorrow. So I mean, here's the way we think about it. It's a capital vehicle. The stock is -- again, it trades extremely trades poorly. While saying that, we got to give investors a reason to want to own the equity is what I would say. So when we look at this company, we are going to try to grow it.

We're looking at direct lending options and things like that. To the extent that we don't, at some point, we'll likely tender for the shares and just clean up the vehicle. I think for now, we want to give it a good go. This is how BXMT has grown. This is how we've grown things during our Fortress days. But to the extent that we can't grow it because for whatever reasons, we'll likely tender for the shares.

Okay. Great. And actually, just going back to the earlier question, just on strategic actions. The partial listing of Newrez as opposed to a spin, but just a small, whatever, 15% listing for a mark-to-market. Just given that you could do that sooner versus the other strategic actions, which probably take time to sort of build out the AUM more, I mean, is that something worth sort of reconsidering or revisiting?

Yes. We explore that every day. So that is something that we are exploring.

And the next question comes from Eric Hagen with BTIG.

Fleshing out some of this other conversation here. We're looking at Slide 6 again. Is the expectation to raise the third-party capital for Paramount and pay down that $1.1 billion that you drew on the financing line? Or does this pro forma cash position assume that you've raised the third-party capital to fund that?

Yes. We will not -- I mean, if -- once we raise the third party -- we haven't drawn on the money because the deal hasn't closed yet. You still got to get shareholder approval. Once we do that, once we do close, to the extent that we do draw down, we'll pay that off once we raise the money. The money -- there's a ton of money for people that want to be part of this, whether that be LPs and/or, as I pointed out to Crispin, LPs and/or what I would call peers and partners in the business. It's just -- the question for us is maximizing economics.

But from a brand standpoint, I would tell you that we're having anywhere from 5 to 10 conversations minimum a day with LPs. So not only doing the deal and not everybody wants to be in office, quite frankly, because a lot of folks have gotten smoked going in right after COVID or just before COVID. But the gist of it is the amount of conversations we're having as an organization with LPs and the amount of capital that's out there and real discussions we've had, where we feel really good about where we are on this one.

Got you. That's helpful. I mean there's a lot of attention right now on underwriting, even some fraud with these consumer lenders, regional banks and such. I mean do you see that driving changes in the market? I mean your entire business effectively is like underwriting focused at this point. I mean we wouldn't expect any bad underwriting in your portfolio, but do you see that having a spillover effect in any way to the rest of the market?

Yes. I think it's something that when we talk about our ABF funds, it is a question we get asked all the time. When you look at First Brands or you look at Tricolor, what really happened there. One thing that's different about Rithm versus other folks, we have what, 10,000 employees across the firm. The mortgage company has between employees and consultants, probably 10,000 people alone, quite frankly. You look at Genesis, there's a couple of hundred people there. We're underwriting first, and we don't just go out and buy pools of assets unless like I pointed out, many times where we have the ability to hopefully control an outcome, and that outcome is driven through our underwriting and servicing business, and that makes a big, big difference.

While saying that, ABF kind of LPs are -- they want to know what happened with First Brands. They want to know what happened with Tricolor. Tricolor was classic fraud, right? They pledge assets twice. You look at First Brands, it's a liquidity issue, but I'm sure there's some other stuff that's going on there. And so -- but for us, underwriting first. We've seen these kind of events happen. I don't think they're systemic, quite frankly, for the broader world or market, but we have to keep our eyes and ears open here and lead with underwriting first.

Good stuff. One more, if I may. The falloff in interest income from the investment portfolio quarter-over-quarter, it looks like it went from $82 million to $52 million. What was the driver of that?

Sure. So Eric, we held lower agency balances. And in addition, we had a retrospective adjustment in interest income that was offset in unrealized gains, losses. So when you look at that line, you will see the pickup.

And the next question comes from Jason Weaver with JonesTrading.

For the initial ABF fund you're targeting with the wealth management platform, can you talk about the initial size you're targeting for that as well as the expected life of that vehicle?

I don't think -- I mean, here's what I would say. From an asset, I don't think we can talk about -- we can't talk about the marketing of the so-called fund. What I would tell you is we do have a couple of things that we're working on. We mentioned that so-called fund. Are we allowed to talk about this? I'm looking at counsel. Okay.

So the size is likely going to be upwards of [ $500 million ] and then the average duration of something like that. It's -- think about the typical products that we produce. I mentioned earlier, non-QM and RTL are kind of the in flavor as people like the diversified risk there, those average cash flows think of something in the kind of the 3-year area. And then we -- I mentioned earlier, and it's not just us, but there's a lot of managers like us that are out there with different ABF funds. And it's -- when you think about the product suite there, it could be ABS, it could be mortgage, it could be CLO type, it could be -- you'll have aviation finance, all kinds of different things that can go into these different buckets.

All right. That's helpful. And then next, as it pertains to the dividend, you've been covering for, I don't know how long, 5 years as far back as I remember. How do you think about the payout policy right now, whether you can see it expanding given some possible capital needs for integrating these acquisitions or building more of a buffer against market headwinds?

What I would say from -- obviously, it's a Board decision. I would say pretty definitively from the team here inside the walls of Rithm that we're not going to raise our dividend. Quite frankly, if we had our druthers, if you think about it, we're paying out something between, call it, $600 million a year if you reinvested that capital at a 15% or 20%. We mentioned the company generated an 18% ROE. If we redeployed the capital there, it's going to be highly accretive from an earnings standpoint, and that would enable the stock to grow. So I would say definitively, there's no desire to increase the dividend at this point. If we go the other way, we would.

And the next question comes from Trevor Cranston with Citizens JMP.

Another question on the kind of valuation of the company and closing the gap to the sum of the parts level. Can you talk about how you guys think about share buybacks as a tool to sort of help bridge that gap or if the focus is really just more so on kind of continuing to grow and increase revenue streams to get there?

So share buybacks, people talk about share buybacks. I think our path is going to be continued growth as long as we think we can deploy capital at, call it, 15% to 20% returns. I would say while we have all kinds of policies in place, whether they be share buybacks, ATMs, et cetera, based on the 2 acquisitions, I would assume that we're not going to be doing any share buybacks here. I think the question around a potential IPO of the mortgage company is always something that we wrestle with.

So at some point, if that's something we do, that would potentially raise a little bit of capital for us. But there's no -- I would say, right now, and this is, again, my view, we're not going to be doing share buybacks. We're funding $1 billion-something acquisition on Paramount and Crestline. And as we continue to grow earnings and grow FRE, I think you're going to see a huge reval of the company. That's what we're all playing for.

Got it. Okay. That's helpful. And then on the Sculptor business, you guys have had a pretty good year of fundraising. I think the number you gave is $4.6 billion so far this year. Can you give us an outlook on kind of how you're thinking about fundraising heading into 2026, if you think that kind of pace is sustainable? And just generally, how you think about the organic growth potential of the asset management side over the next year or so?

Sure. So when we look at the asset management business, we are going to be making capital investments in people as we continue to grow our, what I would call our capital formation/strategy group. So there'll be some significant investments there. We have -- I'm hopeful over the next kind of 60 days, we have some big announcements there around some personnel.

When you look at the growth, the $4.5 billion or so, the Sculptor raised, a large amount of that was in the real estate business. The underlying performance in like the credit business, the multi-strat business continues to be very, very good. You look at Crestline, their performance continues to be very, very good. When you look at across our firm and you think about Rithm, Sculptor, Crestline, you could assume at some point that the capital formation groups come together and things really start to synergize and we're able to raise a lot more capital.

So when I look at a $4.5 billion or $5 billion capital raise for '25, do I think that's repeatable in '26? Absolutely. I mean you look at the bigger all players, and they've done a fabulous job raising tons and tons of capital. There's no reason why we can't surpass the numbers that have been done in '25.

This concludes our question-and-answer session. I would like to turn the conference back over to Michael Nierenberg for any closing remarks.

Well, thanks for the thoughtful questions. Thanks for listening to us this morning. As I wrap up again, very excited where we sit. From a company perspective, things are going, what I would say, extremely well right now. Earnings, the strength of our earnings continues to be robust, driven by the businesses that we bought or built to get us here. Those very same businesses are going to enable us to continue to grow our platform. Obviously, very focused on the asset management business, very focused on getting the proper reval of the company.

The mortgage company is something that we always -- we look at and say, do we take it public or not? Quite frankly, it's sometimes it's easier not to be in the public markets as you think about every asset manager talking about going public to private when you look at assets going even into the wealth channels. But overall, things are clicking on all cylinders here for us, and we look forward to updating you throughout the quarter and into next quarter.

So thanks again. Have a great weekend.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.