Q1 2026 Rithm Capital Corp Earnings Call

April 28, 2026

Operator 2: Good day, and welcome to the Rithm Capital Q1 2026 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press Star, then One on a touch-tone phone. To withdraw your question, please press Star then Two. Please note this event is being recorded. I would now like to turn the conference over to Emily Holkey, Deputy General Counsel. Please go ahead.

Operator: Good day, and welcome to the Rithm Capital Q1 2026 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press Star, then One on a touch-tone phone. To withdraw your question, please press Star then Two. Please note this event is being recorded. I would now like to turn the conference over to Emily Holkey, Deputy General Counsel. Please go ahead.

Speaker #2: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touchtone phone.

Speaker #2: To withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the conference over to Emma Holke, Deputy General Counsel.

Speaker #2: Please go ahead. Thank you and good morning, everyone. I'd like to thank you for joining us today for Rhythm Capital's First Quarter 2026 Earnings Call.

Emily Holkey: Thank you, good morning, everyone. I'd like to thank you for joining us today for Rithm Capital's Q1 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.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.

Emma Hoelke: Thank you, good morning, everyone. I'd like to thank you for joining us today for Rithm Capital's Q1 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.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.

Speaker #2: Joining me today are Michael Nierenberg, Chairman, CEO, and President of Rhythm Capital; Nick Santoro, Chief Financial Officer of Rhythm Capital; and Baron Silverstein, President of NewRez.

Speaker #2: Throughout the call, we are going to reference the earnings supplement that was posted this morning to the Rhythm Capital website, www.rhythmcap.com. If you've not already done so, I'd encourage you to download the presentation now.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: In addition, we will be discussing some non-gap financial measures during today's call. Reconciliations of these measures to the most directly comparable gap measures can be found in our earnings supplement.

Emily Holkey: 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.

Emma Hoelke: 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.

Speaker #2: With that, I'll turn the call over to Michael.

Speaker #3: Well, thanks, Emma. 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.

Michael Nierenberg: Thanks, Emma. Good morning, everyone, and thanks for joining us. I'm gonna 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 Ellicor, which was formerly known as Paramount. We rebranded the, you know, the real estate company last night. We're excited about that, and Peter has a lot of great stuff to discuss. For the company, another solid quarter for our company demonstrating the power of the franchise. Activity levels across the board were robust.

Speaker #3: Baron Silverstein will cover the mortgage company, Peter Brinley will cover Ellicor, 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.

Speaker #3: 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.

Michael Nierenberg: The firm, you know, 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 business is 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.

Speaker #3: As market participants pull back, this will play to our advantage. The majority of our capital in our asset management business is with institutional partners.

Speaker #3: 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.

Speaker #3: 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.

Speaker #3: When you look at direct lending, 80% of direct lending sits in institutional drawdown funds. Systemic risk here will be contained. Large BDC portfolios have concentrations of approximately 20% in software, while saying that, the faults in the largest BDC and sponsors sit below the five-year historical average of 1.1%.

Michael Nierenberg: Systemic risk here will be contained. Large BDC portfolios have concentrations of approximately 20% in software. While saying that, defaults in the largest BDC and sponsors sit below the five-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. There's lots of demand everywhere for ABF products. During the quarter, we did 2 billion of securitizations. 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 Ellicor, leasing activities are excellent, and Peter will speak to that.

Speaker #3: So 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 are rebounded.

Speaker #3: S&P is at all-time highs. Securitization markets remain robust. And there's lots of demand everywhere for ABF products. During the quarter, we did $2 billion of securitization.

Speaker #3: 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 Ellicor, we see activities are excellent, and Peter will speak to that.

Speaker #3: New York City is now roughly 93% leased and San Francisco is on fire as a result of the AI boom and the need for office.

Michael Nierenberg: New York City is now roughly 93% leased, and San Francisco's 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 2025. They leased approximately 1.75 million square feet. 76% or 75% of the activity was in New York City with the rest in San Fran. Before I go into the supplement, I wanna 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.

Speaker #3: 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.

Speaker #3: They leased approximately 1.75 million square feet. 76 or 75% of the activity was in New York City with the rest in San Francisco. So before I go into the supplement, I want to lay out Rhythm, our companies, and how to think about us.

Speaker #3: As everybody knows, we started the company in the spring of 2013 at Fortress. We started with a billion dollars of permanent capital. And since then, we've created the following.

Michael Nierenberg: We started with $1 billion of permanent 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 one of the top 5 mortgage companies in the U.S. 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. You know, again, that's through the acquired Paramount Group, which once again was rebranded to Ellicor.

Speaker #3: $8 billion of permanent capital, all raised in the public markets. $110 billion plus of assets. $60 billion managed for third parties. That's our asset management business.

Speaker #3: We have a $50 billion balance sheet. That not only supports our operating companies, it also supports our asset management business. We have one of the top five mortgage companies in the United States.

Speaker #3: 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 US.

Speaker #3: 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 Ellicor.

Speaker #3: And we paid north of $6.5 billion in 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.

Michael Nierenberg: We paid more than $6.5 billion in dividends. 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, the sum of the parts, in our view, is much greater than the whole. I'll refer to the supplement which has been posted online. I'm gonna start on page 3. When you look at the firm, we have really what I would say five core operating businesses or really six. Sculptor and Crestline, our two asset management divisions. Couldn't be more proud, couldn't be more excited where we sit today with both of those. Very complementary strategies. Different.

Speaker #3: You heard it before. And you'll hear it again. The sum of the parts in our view is much greater than the whole. Now I'll refer to the supplement, which has been posted online.

Speaker #3: I'm going to start on page three. So when you look at the when you look at the firm, we have really what I would say five core operating businesses, or really six.

Speaker #3: Sculptor and Crestline are two asset management divisions. Couldn't be more proud. Couldn't be more excited where we sit today with both of those. Very complementary strategies.

Speaker #3: Different one is based in Fort Worth, one is based in New York City, as you know, with global offices everywhere. Assets managed at approximately $60 billion.

Michael Nierenberg: One is based in Fort Worth, one is based in New York City, as you know, with global offices everywhere. Assets managed about approximately $60 billion, with more funds being raised daily. Elecor, formerly known as Paramount, Class A 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 five US mortgage lender. Baron will speak to that. 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. You have Rithm, which sits obviously in the investment portfolio and at the REIT level. Page 4 for the quarter.

Speaker #3: With more funds being raised daily. Ellicor, formerly known as Paramount, Class A owner-operator of offices in New York and San Francisco. Peter will talk to that.

Speaker #3: Business is doing great. New Reds are mortgage company. Again, number three. In total unit service in the United States, including the large money center banks.

Speaker #3: And a top five U.S. mortgage lender—Baron will speak to that. And then Genesis Capital, which is our residential transition lender. It's also a large multifamily originator.

Speaker #3: And I'll speak to that in a little bit. And then you have Rhythm, which sits obviously in the investment portfolio and at the REIT level.

Speaker #3: Page four for the quarter. What I would say is, as expected, $0.51 per diluted share when you look at our EAD. $289.6 million in earnings.

Michael Nierenberg: You know what I would say is, as expected, $0.51 per diluted share when you, when you look at our EAD, $289.6 million in earnings, 17% return on equity. GAAP net income is always gonna be noisy due to hedges moving in and out as we hedge up our MSR portfolios. $67.8 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. When you think about it, we pay $0.25 in dividends. Effectively, we've grown book value quarter-over-quarter net net. That's truly a testament to our team as we think about the macro strategy and the markets in general.

Speaker #3: 17% return on equity. Gap net income is always going to be noisy due to hedges moving in and out as we hedge up our MSR portfolios.

Speaker #3: 67.8 million of gap net income. 12 cents per diluted share. And a 4% return on equity. Book value, we ended the quarter at $7 billion or $12.51.

Speaker #3: When you think about it, we pay 25 cents in dividends, effectively we've grown book value quarter over quarter net net. And that's truly a testament to our team.

Speaker #3: As we think about the macro strategy and the markets in general. Dividend yield, 10.5%. 25 cents per common share. And cash and liquidity, we ended the quarter at approximately a billion four.

Michael Nierenberg: Dividend yield, 10.5%, $0.25 per common share. In cash and liquidity, we ended the quarter at approximately $1.4 billion. When you look at the quarter in review and we think about Rithm Asset Management, which is, you know, the so-called parent, we deployed over $2 billion in corporate credit, ABF investments over $1 billion, and in ABF investments, in the Sculptor Real Estate Fund V, they've committed $1 billion in Q1 alone 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 AUM. When you look at Crestline, overall performance, terrific.

Speaker #3: When you look at the quarter in review, and we think about Rithm Asset Management, which is the so-called parent, we deployed over $2 billion in corporate credit.

Speaker #3: ABF investments, over $1 in ABF investments. In the Sculptor real estate fund five, they've committed $1 billion in the first quarter loan in 2026.

Speaker #3: Keep in mind, coming off a great, successful fundraise—a $4.6 billion on their latest fund. Great brand, great track record. And a great business for us.

Speaker #3: Sculptor had gross inflows of $600 million, ending the quarter with $37 billion of AUM. 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.

Michael Nierenberg: You know, outperforming our initial underwriting. Grew management fee revenue by 16% year over year in Q1 2026, 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 2022. At the time we bought this business, they were doing $1.7 billion of total loans for the entire year. We did $1.6 billion in Q1. We added 118 new sponsors. P&L looks great and credit performance remains strong. We will not sacrifice production for credit, just so we're on the same page.

Speaker #3: 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.

Speaker #3: 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.

Speaker #3: 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.

Speaker #3: That's so we're on the same page. New Reds mortgage, our mortgage company, servicing portfolio. Ended the quarter approximately at $850 billion. That includes third party.

Michael Nierenberg: Newrez Mortgage, you know, our mortgage company servicing portfolio ended the quarter approximately at 850 billion. That includes third-party funded value of fifteen and a half billion, generated 274 million of pre-tax income with a 19% annualized operating early in Q1. On the investment portfolio, robust around our non-QM business. We originate quite a bit there in the mortgage company. We did 2 billion of securitizations. During the quarter, we invested 3 billion in different mortgage assets. That includes non-QM and residential transition loans. We also purchased 140 million of home improvement loans under our flow agreement with Upgrade, bringing the total purchase since Q3 to $667 million.

Speaker #3: Funded value of $15.5 billion. Generated $274 million of pre-tax income with a 19% annualized operating ROE in the first quarter. And then on the investment portfolio, robust around our non-QM business.

Speaker #3: We originate quite a bit there. In the mortgage company, we did $2 billion of securitizations. During the quarter, we invested $3 billion in different mortgage assets.

Speaker #3: That includes non-QM and residential transition loans. And we also purchased 140 million of home improvement loans under our flow agreement with upgrade. Bringing the total purchase since Q3 to $667 million.

Speaker #3: When you look at the power of the platform, again, across the board, we have what I would say is we have pretty much everything we need from an asset management business.

Michael Nierenberg: When you look at the power of the platform again, across the board, What I would say is we have pretty much everything we need from an asset management business. We'll grow in areas that we don't feel, you know, We'll grow in areas where we have core competencies. What that will likely mean is we'll add teams, not businesses, because we're extremely happy where we sit between Sculptor, Crestline, and now known as Ellicor as we grow our real estate presence. When you look across the board, we're everything in credit. We're everything in the multi-strat business. On the real estate side, there's roughly 11 billion of AUM in the house. In asset-based finance, I would expect us to grow that significantly, you know, with our third-party partners, globally.

Speaker #3: We'll grow in areas that we don't feel we have that we'll grow in areas where we have core competencies. So what that will likely mean is we'll add teams not businesses because we're extremely happy where we sit.

Speaker #3: Between Sculptor, Crestline, and now known as Ellicor, as we grow our real estate presence. So when you look across the board, we're everything in credit.

Speaker #3: We're everything in the multi-strand 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.

Speaker #3: When you look at the Sculptor business on page eight, again, we couldn't be more happy where we sit today. We're two and a half years in.

Michael Nierenberg: When you look at the Sculptor business on page eight, again, we couldn't be more happy where we sit today. We're 2 and a half years in, total AUM $37 billion. Most importantly, performance. We are going to lead with performance. We're not gonna lead with AUM. We have a fundamental belief that you could only deploy so much capital into the markets when the market's giving you the ability to create what I would call alpha or slash outsized returns. That's how we view the business. While all of us want to grow AUM, we need to lead with performance first. Couldn't be more proud of the team. Couldn't be more proud of the business, really excited where that business is gonna go. Crestline, our asset management business, which we closed on in December 2025. Total AUM a little under $20 billion.

Speaker #3: Total AUM $37 billion. Most importantly, performance. We are going to lead with performance. We're not going to lead 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 slash outsized returns.

Speaker #3: That's how we view the business. So, while all of us want to grow AUM, we need to lead with performance first. Couldn't be more proud of the team.

Speaker #3: Couldn't be more proud of the business. And really excited where that business is going to go. Crestline, our asset management business, which we closed on in December of '25.

Speaker #3: Total AUM little under $20 billion. A ton of investors across the platform. I was just in Tokyo. A week and a half ago, meeting with both Crestline and Sculptor investors at a conference.

Michael Nierenberg: A ton of investors across the platform. You know, I was just in Tokyo a week and a half ago, meeting with both Crestline and Sculptor investors at a conference. You know, in Asia or in Tokyo, we have 15 different LPs invested in both the Crestline platform and the Sculptor platform. 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 markets today. Investment performance, if you look to the bottom left side of the page, Capital Solutions, 13.5 net since 2022. Direct lending, 12 and change net since 2023. Overall performance, very good. I mentioned earlier about software. Only 7% of invested assets are classified in software.

Speaker #3: 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.

Speaker #3: The teams do a great job. When you look at this business, we are well positioned to take advantage of any dislocations in the markets today.

Speaker #3: Investment performance, if you look to the bottom left side of the page, capital solutions, 13 and a half net since '22. Direct lending, 12 and change net since '23.

Speaker #3: It's overall performance very good. I mentioned earlier about software, only 7% of invested assets are classified in software. As we look to Ellicor, I'm going to turn it over to Peter.

Michael Nierenberg: As we look to Ellicor, I'm gonna turn it over to Peter, who'll give you some color on the real estate business. After that, I'll talk about Genesis, then Baron will take the Newrez portion. Peter.

Speaker #3: He'll give you some color on the real estate business. And then after that, I'll talk about Genesis and then Baron will take the New Reds portion.

Speaker #3: Peter?

Speaker #1: Thank you, Michael. Paramount Group, as Michael just now said, has become Ellicor Properties. I'm 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.

Peter Brindley: Thank you, Michael. Paramount Group, as Michael just now said, has become Elecor Properties, 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 Elecor 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 two markets.

Speaker #1: This new chapter reflects our intention to leverage the operational strength of the Ellicor team and the financial strength of Rhythm Capital to further enhance our trophy-quality portfolio.

Speaker #1: 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.

Speaker #1: Energize their teams and drive productivity. It is among the most pronounced trends in our two 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.

Peter Brindley: 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 acknowledgement of the evolution of the workplace and signifies a renewed commitment to delivering a leading workplace experience, one 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 Elecor Properties team is energized and working hard to execute on our exciting plans. Turning to page 12, Elecor Property highlights. Elecor 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.

Speaker #1: This rebrand is an acknowledgment of the evolution of the workplace and signifies a renewed commitment to delivering a leading workplace experience. One where world-class amenities are integrated into our buildings resulting in a best-in-class differentiated experience for our tenants.

Speaker #1: This is a story of continuity and acceleration. The Ellicor Properties team is energized and working hard to execute on our exciting plans. Turning to page 12, Ellicor Property highlights Ellicor owns, manages, and operates high-quality, centrally located class A office properties in New York and San Francisco.

Speaker #1: The portfolio is managed by a senior leadership team with deep knowledge of our markets and a track record of success. Ellicor 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.

Peter Brindley: Ellicor 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 19 December 2025, we have identified operating efficiencies to increase our annual management company EBITDA by approximately $40 million. Ellicor'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.

Speaker #1: Since the acquisition on December 19, 2025, we have identified operating efficiencies to increase our annual management company EBITDA by approximately $40 million. Ellicor's portfolio consists of 10 core assets totaling 9.9 million square feet.

Speaker #1: 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.

Speaker #1: 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.

Peter Brindley: Year to date, we have executed leases and have leases pending on more than 360,000 sq ft across the New York and San Francisco portfolio, with weighted average initial rent of $94.64 per sq ft, 14.9% higher than our weighted average initial rents in 2025. Capital markets. Rithm acquired the portfolio for $585 per sq ft, 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.

Speaker #1: With weighted average initial rent of $94.64 per square foot, 14.9% higher than our weighted average initial rents in 2025. Capital markets, Rhythm acquired the portfolio for $585 per square foot and increasingly attractive basis given the recent transaction activity in both New York and San Francisco.

Speaker #1: 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.

Speaker #1: Financing, subsequent to Quarter Red, 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-lattered maturity profile.

Peter Brindley: 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 amenitization of four key assets, two in New York and two in San Francisco, which we expect will drive significant rent growth and occupancy gains in 2026 and beyond. Turning to page 13, Ellicor Properties leasing highlights. As Michael mentioned, in 2025, we leased more than 1.7 million square feet, our highest annual total on record.

Speaker #1: 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 amenitization of four key assets: two in New York and two in San Francisco.

Speaker #1: Which we expect will drive significant rent growth and occupancy gains in 2026 and beyond. Turning to page 13, Ellicor Properties leasing highlights. As Michael mentioned, in 2025, we leased more than 1.7 million square feet, our highest annual total on record.

Speaker #1: A significant percentage of our 2025 leasing velocity occurred in New York, where we are currently over 92% leased at share in the balance in San Francisco.

Peter Brindley: 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 lease 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 12.2% 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.

Speaker #1: In 2026, a significant percentage of our leasing activity year-to-date, including both lease assigned and leases pending, is occurring in San Francisco. Predominantly with leading technology and entertainment companies as well as leading law firms.

Speaker #1: 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 lease assigned and leases pending is 12.2% higher compared to 2025, as leasing fundamentals continue to improve across the board in Midtown Manhattan.

Speaker #1: Our plan is to make significant improvements at both 1633 Broadway and 712 Fifth Avenue. 1633 Broadway is one of Manhattan's largest buildings.

Peter Brindley: 1633 Broadway is 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 lease occupancy was 59.1% at share, driven largely by a couple of known move-outs at 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.

Speaker #1: 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.

Speaker #1: 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-outs at one market plaza and one front street, within the past year.

Speaker #1: 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.

Speaker #1: 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.

Peter Brindley: 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, seventh-floor sky bar, executive lounge, and a rooftop deck. At One Front Street, we are totally reimagining the lobby with a cafe, a bar, a restaurant, a 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.

Speaker #1: 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, seventh-floor sky bar, executive lounge, and a rooftop deck.

Speaker #1: At one front street, we are totally reimagining the lobby with a café, a bar, a restaurant, a second-floor amenity space with a gym, conferencing, a private lounge, and we will also be fully modernizing the elevator system in the building.

Speaker #1: We are moving quickly to execute on our key objectives and look forward to updating you on our progress.

Speaker #2: Thanks, Peter. By the way, good sales pitch by Peter for if anybody's looking for space, we got a lot of really good stuff going on.

Michael Nierenberg: Thanks, Peter. By the way, good sales pitch by Peter for if anybody's looking for space. We got a lot of really good stuff going on. I'll now talk about Genesis. I, you know, in my opening remarks, record quarter, $1.6 billion.

Speaker #2: I'll now talk about Genesis. In my opening six, what I would say is the business when you think about when you think about some of 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.

Michael Nierenberg: What I would say is the business, when you think about, when you think about some of 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.

Speaker #2: And I think there's roughly $3.4 billion of commitment 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 seven years.

Speaker #2: 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 percent multifamily origination.

Michael Nierenberg: When you look at our business, the Genesis business today is roughly 35% to 40% multifamily origination. 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, 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 six and a half billion and $7 billion of production this year. The P&L on that when we bought the business in 2022 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.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: When you look at the business, it's been a great one for us. We expect to do something between, call it, $6.5 and $7 billion of production this year.

Speaker #2: The P&L on that, when we bought the business in '22, was—I think it was, what, roughly $45 to $50 million or something like that.

Speaker #2: This year, we should do something between 150 and 175 of EBITDA. So it's been a great business. But like I said, we won't sacrifice credit in lieu of production.

Michael Nierenberg: It's been a great business. Like I said, we won't sacrifice credit in lieu of production. When, you know, when you look 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 of some of the single-family rental operators get out. We have a very smart very small portfolio that we've been selling down to retail. We got 2,000 homes there. I do think there's gonna be some dislocation there. You're seeing it in some of the equity prices and some of the larger institutional holders in that business.

Speaker #2: When you look 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.

Speaker #2: We have a very small portfolio that we've been selling down to retail. We've got a couple thousand homes there. But I do think there's going to be some dislocation there.

Speaker #2: 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 over to Barron, who will talk about Nurez.

Michael Nierenberg: With that, I'm gonna turn over to Baron, who will talk about Newrez. We'll touch on the investment portfolio, then we'll open it up for Q&A.

Speaker #2: We'll touch on the investment portfolio, and then we'll open it up for Q&A.

Speaker #3: All right. Thank you, Michael. Good morning to everybody. Starting on slide 18, Nurez had another great quarter. First quarter pre-tax income, excluding mark-to-market, of approximately $274 million, which is up 10% quarter over quarter and delivering a 19% ROE for the quarter.

Baron Silverstein: All right. Thank you, Michael. Good morning to everybody. Starting on slide 18. Newrez had another great quarter.

Baron Silverstein: First quarter pre-tax 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. This performance continues to show the power of our platform and our ability to drive consistent earnings. On slide 19, just a quick highlight, and just given the size and fragmented nature of the mortgage and homeownership market, we believe there is significant runway for scaled technology-first operators like Newrez. Since the inception of our platform, we have grown our originations market share 8 times and our servicing market share 6 times, positioning us, as Michael said, as the third-largest servicer and the fifth-largest originator.

Speaker #3: The results were driven by our discipline 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.

Speaker #3: On slide 19, just a quick highlight—and just given the size and fragmented nature of the mortgage and homeownership market, we believe there is significant runway for scaled, technology-first operators like Nurez.

Speaker #3: Since the inception of our platform, we have grown our originations market share eight times and our servicing market share six times, positioning us, as Michael said, as the third-largest servicer and the fifth-largest originator.

Speaker #3: And as we continue to deliver on our strategy of making home happen, we've continued 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.

Baron Silverstein: As we continue to deliver on our strategy of Making Home Happen, we've continued 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. 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, you know, we project an additional 15% reduction from our current run rate. Executing on this growth up and spend down strategy is going to continue to deliver for our shareholders.

Speaker #3: 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.

Speaker #3: Our expense initiatives are laser-focused on harnessing technology to deliver operating leverage. Our cost per loan, which has already almost half of industry average, we project an additional 15% reduction from our current run rate.

Speaker #3: And 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.

Baron Silverstein: 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 2026, up 75% year over year. While market competition continues to pressure gain on sale margins, we maintained 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 Close Refinance application, our Wholesale Express Home Equity offer, Streamlined Title, Crypto Mortgage, and Medical Loans. Most recently, our Freddie Mac VantageScore pilot, demonstrating our shared commitment to responsibly expand access to homeownership and reduce costs to borrowers.

Speaker #3: However, we continue to drive growth in our higher margin direct origination channels, consumer direct and wholesale, which comprise 37% in Q1 '26, up 75% year over year.

Speaker #3: 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 four-quarter range.

Speaker #3: We also had a very busy quarter of new product launches. Quick close refinance application, our wholesale express home equity offer, streamlined title, crypto mortgage, and medical loans.

Speaker #3: And most recently, our Freddie Mac Vantage Score pilot demonstrating our shared commitment to responsibly expand access to homeownership and reduce cost to borrowers. On slide 22, we continue to build on our proprietary Resy AI functionality which is an end-to-end intelligence system enabling our originations platform, allowing us to capitalize on our operational efficiencies.

Baron Silverstein: On slide 22, we continue to build on our proprietary Resi-A-Aza 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 co-developed 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. 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 boardings. 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.

Speaker #3: Our partnership with Home Vision is ahead of schedule, with our first co-developed 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.

Speaker #3: 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 five new clients in 22 billion in new loan boardings.

Speaker #3: 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.

Speaker #3: Regarding Valen, we're on track for the transition to their operating system in early '27. And the magnitude of these benefits of moving to an AI-native and modern servicing technology solution cannot be overstated.

Baron Silverstein: Regarding Valon, we're on track for the transition to their operating system in early 2027, the magnitude of these benefits of 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. It will also be a significant benefit to any and all servicers who choose to move to Valon. 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. I continue to believe our business is as the best position as it ever has been, and I look forward to sharing the next chapter of the Newrez growth story. Mike, back to you.

Speaker #3: 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 Valen.

Speaker #3: 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.

Speaker #3: So I continue to believe our businesses is the best positioned as it ever has been and I look forward to sharing the next chapter of the Nurez growth story.

Speaker #3: Awesome, Michael. Back to you.

Speaker #1: Awesome. Thanks, Barron. Just wrapping up here on the investment side, probably one of the more active quarters we've had in a while, quite frankly.

Michael Nierenberg: Awesome. Thanks, Baron. Just wrapping up here on the investment side, probably one of the more active quarters we've had, in, you know, in a while, quite frankly. As I pointed out earlier, we did 4 non-QM securitizations totaling $2 billion. You know, the one thing I would say is this doesn't, this doesn't include some of the other things we're doing around, you know, a 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 RTLs. I pointed out earlier about the Upgrade flow agreement, how we purchased more loans in the quarter.

Speaker #1: As I pointed out earlier, we did four 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 a 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.

Speaker #1: During the quarter, $3 billion of investment, $1.4 billion in non-QM loans, $1.6 billion in RTLs. I pointed out earlier about the upgrade flow agreement, how we purchased more loans in the quarter.

Speaker #1: So, overall, investment activities remain, what I would say, despite all the headline risk and the noise, robust. What you're going to see from the firm as we go forward is, hopefully, real growth in the ABF business under the Sculptor brands and some of the other, and Crestline, brands.

Michael Nierenberg: Overall, investment activities remain what I would say, despite all the, you know, the headline risk and the noise, robust. What you're going to see, you know, from the firm as we go forward, hopefully real growth in the ABF business under the, you know, the Sculptor brands and some of the other and Crestline brands. 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. Again, as we look forward, we're not going to sacrifice, you know, we're not going to sacrifice credit for AUM growth, and that's going to be our common theme.

Speaker #1: 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.

Speaker #1: 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.

Speaker #1: So with that, I'll turn it back to the operator and then we can open up for some Q&A.

Michael Nierenberg: With that, I'll turn it back to the operator, and then we can open up for some Q&A.

Speaker #2: We will now begin. The question and answer session. To ask a question, you may press star, then one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys.

Operator 2: The first question today comes from Crispin Love with Piper Sandler. Please go ahead.

Speaker #2: If at any time your question has been addressed and you would like to withdraw your question, please press star, then two. At this time, we will pause momentarily to assemble our roster.

Speaker #2: The first question today comes from Crispin Love with Piper Sandler. Please go ahead.

Operator: We will now begin the question and answer session. To ask a question, you may press star then one on your touchtone phone. If you are using your speakerphone, please pick up your handset before pressing the key. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time we will pause momentarily to assemble our roster. The first question today comes from Crispin Love with Piper Sandler. Please go ahead.

Speaker #1: Thank you. Good morning, everyone. First, Michael, I appreciate your comments that you're not going to sacrifice credit for AUM growth. But can you discuss the fundraising momentum in the asset management business and the outlook there—Sculptor and Crestline?

Crispin Love: Thank you. Good morning, everyone. First, Michael, I appreciate your comments that you're not gonna sacrifice credit for AUM growth. Can you discuss the fundraising momentum in the asset management business and the outlook there, Sculptor and Crestline, what you're seeing from institutions and then on the BDC private wealth side of that, those businesses, just given all the noise out there?

Speaker #1: What you're seeing from institutions and then on the BDC private wealth side of those businesses just given all the noise out there?

Speaker #3: 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 sculptor just raised $4.6 billion in probably one of the largest successful fundraisers in the real estate space.

Michael Nierenberg: Sure. What I would say on the, you know, I mentioned before, and this is a little bit of old news. The real estate group at Sculptor just raised $4.6 billion, and probably one of the largest successful fundraisers, you know, in the real estate space, I would say in a long time. When we look at the core competencies, and this is where I like to think that we have an edge, whether it be at, you know, Sculptor, and you look at the overall track record at what we've done at Rithm and then at Crestline. We're gonna leverage the core competencies of what we do.

Speaker #3: I would say in a long time. When we look at the core competencies, and this is where I like to think that we have an edge, whether it be at sculptor and you look at the overall track record at what we've done at Rhythm and then at Crestline, we're going to leverage the core competencies of what we do.

Speaker #3: So for example, when I look at the ABF space, we launched an evergreen fund in the third quarter with one of our wirehouse partners which is performing extremely well.

Michael Nierenberg: For example, when I look at the ABF space, we launched an evergreen fund in Q3 with one of our Weyerhaeuser partners, which is performing extremely well. You know, that's backed by some of the production stuff that we create, you know, whether it be in Genesis or whether it be in Newrez. When you look at Sculptor's track record around ABF, it's quite frankly, it's unparalleled. We'll be, you know, 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, you know, whether it be at Sculptor and/or Crestline, you know, the credit performance has been very, very good.

Speaker #3: The and that's backed by some of the production stuff that we create whether it be in Genesis or whether it be in Nurez. When you look at sculptor's track record around ABF, it's quite frankly, it's unparalleled.

Speaker #3: 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.

Speaker #3: 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.

Michael Nierenberg: We don't see any real deterioration in any of the names that we actually hold within any of the funds. I do think it's important to note when you look at, you know, the so-called noise in the private credit markets, a lot of that has been driven by retail. 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. I think one of, you know, I cited this this morning. In the documents, it says you could have 5% redemption. When these products are marketed, it depends on who the underlying fund manager is.

Speaker #3: So, while everybody wants these evergreen funds 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.

Speaker #3: 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, 5% redemption limits, there's a reason that happens because if you think about a logically, if Mr. and Mrs. Smith want to take out a dollar from their whether it be their BDC or their credit fund and Mr. and Mrs. Jones don't want to take out a dollar, why should Mr. and Mrs. Jones get penalized because someone else needs liquidity and you have to liquidate a good position?

Michael Nierenberg: When you look at the underlying markets and you have something that says in a document, 5% redemption limits, there's a reason that happens. If you think about it logically, if Mr. and Mrs. Smith want to take out $1 from their, whether it be their BDC or their credit fund, and Mr. and Mrs. Jones don't wanna take out $1, why should Mr. and Mrs. Jones get penalized because someone else needs liquidity and you have to liquidate a good position? That's why I think a lot of these documents, you have these caps. While saying that, I think it's an education process. There's been a lot of stuff that's been distributed retail. You know, the good news for us is we don't have a ton of stuff through retail.

Speaker #3: 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.

Speaker #3: 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's learning.

Michael Nierenberg: The bad news for us, or actually the good news for us is as we go forward, I think the market's 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 it. The other thing I would say is that it is very, very difficult to deploy. You know, we're not gonna be Blackstone or Apollo or, you know, one of the largest managers. We're gonna grow, hopefully, and we're gonna grow through performance. When you look, it's very, very difficult to create alpha when you have to deploy the sheer amounts 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.

Speaker #3: 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.

Speaker #3: 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 one of the largest managers.

Speaker #3: 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 amounts of capital that a lot of the large asset managers have.

Speaker #3: 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.

Michael Nierenberg: As it relates to the BDCs, you know, roughly I think the numbers are 20% of the BDCs have software exposure. I pointed out in my earlier remarks. While the headline risk is dramatic, you know, if you go back to 2021 when interest rates were 0, and you think about companies that were lent money at 20x revenue, not EBITDA, revenue, and now you have AI kind of, you know, taking a center stage. I think it's gonna take time to play out. We don't really know how that's gonna play out. You know, as you think about the software industry, I think software that's mission critical to businesses are gonna be the winners. There's gonna be a bunch of losers. Right now, when I look at our business, we feel really good.

Speaker #3: 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 zero, and you think about companies that were lent money at 20 times revenue, not EBITDA, revenue, and now you have AI kind of taking a center stage, I think it's going to take time to play out.

Speaker #3: 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.

Speaker #3: 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.

Michael Nierenberg: As we think of capital formation here at the firm, we're trying to simplify our business. Sculptor's gonna be our asset management business. We have Crestline, which we closed, which is another division of asset management. They do different things. Now the teams are working together, and hopefully, we're gonna raise a lot more capital. Again, that capital is gonna be based on our ability to create alpha relative to the peer set that's out there in the marketplace. That's what gets us excited. I would say onward and upward and, you know, and the business feels really, really good to us.

Speaker #3: Sculptor's going to be our asset management business. We have Crestline, which we closed, which is another division of asset management. They do different things.

Speaker #3: 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 pure set that's out there in the marketplace.

Speaker #3: And that's what gets us excited. So I would say onward and upward. And the business feels really, really good to us. There is noise.

Michael Nierenberg: There is noise that's gonna 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%, 3.50%, unlevered returns in that business are now 7.5%. Debt looks very, very attractive to us. The last point I'll make and then turn it back to you is when you look, debt sits above equity. The S&P is at an all-time high. Something is not adding up here. We'll see how it all plays out. We feel really, really good where we are from an asset management standpoint, where we're going with that division, and how we are going to create more FRE and hopefully turn the tides on the overall valuation of our public equity.

Speaker #3: That's going to create opportunity, because when you think about the credit markets and you have a five-year Treasury, for example, at 4%, the high-yield index is 3.25%, 3.50%.

Speaker #3: Unlevered returns in that business are now 7 and a half percent. 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, debt sits above equity.

Speaker #3: 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.

Speaker #3: Where we're going with that division, and how we're going to create more FRE, and hopefully turn the tides on the overall valuation of our public equity.

Speaker #1: Great, appreciate all the color there. That's a good segue into my next question, because just one pushback that I get from investors is that Rithm has become more complicated.

Crispin Love: Great. Appreciate all the color there. That's a good segue into, to my next question, because just one pushback that I get from investors is that Rithm 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. First, what's the response to that? 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?

Speaker #1: 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.

Speaker #1: 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?

Speaker #3: One is we need to grow our FRE and our asset management business. And that is a big focus, right? So obviously, part of that will come with AUM growth.

Michael Nierenberg: One is we need to grow our FRE and our asset management business. That is a big focus, right? With that, you know, obviously part of that will come with AUM growth, part of that will come with synergies. That's really gonna be a driver. As we create more FRE, the asset management business can then get separated from the broader REIT. When you think about it, we have really two main divisions in our operating business. One is the mortgage company. Again, another simplistic thing. Everybody wants you to take it public. I'm not sure that it's the best time to do that.

Speaker #3: 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.

Speaker #3: So when you think about it, we have really two main divisions in our operating business. One is the mortgage company, which we again, another simplistic thing everybody wants you to take it public.

Speaker #3: I'm not sure that it's the best time to do that. Obviously, you looked at one of our peers, one of the peer mortgage companies—their stock, when you miss earnings and the stock goes down by 35% in a day, no investor wants to be in that position.

Michael Nierenberg: Obviously, you looked at, one of our peer, you know, one of the peer mortgage companies, their stock, you know, when you miss earnings and the stock goes down by 35% in a day, it's, you know. No investor wants to be in that position. You could simplify by taking the mortgage company public, breaking out the asset management business. You have Genesis, which, you know, is gonna continue to grow. What you're gonna see in some of these businesses is more third-party relationships. 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. There's a reason for that, right? You've seen a little bit of rotation out of private credit into what we'll call real assets.

Speaker #3: 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 where 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.

Speaker #3: And there's a reason for that, right? So, you've seen a little bit of rotation out of private credit into what we'll call real assets.

Speaker #3: And 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.

Michael Nierenberg: In the ABF space, you have assets that are, you know, kind of think about almost like hard assets, where the cash flow is backed by these hard assets. You're gonna see more and more capital deployed there. Overall, like, the REIT is still the REIT. If, you know, if I had my druthers or we had our druthers, we, you know, we paid out $6.6 billion in dividends over since we started the company in 2013. 550 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. If you think about that, $13 plus 10, it gets you to a mid-twenties stock price.

Speaker #3: So you're going to see more and more capital deployed there. But overall, the REIT is still the REIT. If I had my druthers or we had our druthers, we paid out 6.6 billion in dividends over since we started the company in '13, 550 million shares.

Speaker #3: That's about 13 bucks 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 bucks plus 10, it gets you to a mid-20s stock price.

Speaker #3: So 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 one.

Michael Nierenberg: 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 one. Thinking about simplifying the mortgage company story, Baron and the team have done a great job there. I think AI and I think Baron's a little bit, you know, Baron's a little bit shy about the amount of money that we're gonna save there. I do think the mortgage industry is gonna change dramatically. I think telling the story around the mortgage company, telling the story around the asset management division, the REIT's not going anywhere. As you know, we just did the Paramount deal. We're gonna bring in third-party relationships there.

Speaker #3: 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's a little bit—Baron's a little bit shy about the amount of money that we're going to save there.

Speaker #3: 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's not going anywhere.

Speaker #3: 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?

Michael Nierenberg: It's really, you know, one of the things we're very focused on, how do we grow earnings, right? If we could grow earnings and create more growth businesses, that'll help us. We have all the pieces we need at this point. Again, I, you know, and I hear you, Crispin. It's, you know, part of the challenge is how do we simplify the story. I think, you know, the bigger asset managers, I would argue, are not any more simple than we are. I'd argue they're more complicated. I think as we continue to get lumped into the REIT space, people will think we're complicated. If we go into the asset management space, I think we'll be less complicated.

Speaker #3: Right? If we could grow earnings and create more growth businesses, that'll help us because we have all the pieces we need at this point.

Speaker #3: But again, and 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.

Speaker #3: I'd argue they're more complicated. So, I think as we continue to get lumped into the REIT space, people will think we're complicated. If we go into the asset management space, I think we'll be less complicated.

Speaker #1: All right. Appreciate all that, Michael. That's it from me.

Crispin Love: All right. Appreciate all that, Michael. That's it from me.

Speaker #3: Thanks, Crispin.

Michael Nierenberg: Thanks, Crispin.

Speaker #4: The next question comes from Bose George with KBW. Please go ahead.

Operator 2: The next question comes from Bose George with KBW. Please go ahead.

Operator: The next question comes from Bose George with KBW. Please go ahead.

Speaker #5: Hey, good morning. If you're on the switching to the mortgage side, you're again on sale margin on the wholesale and correspondent was down a little bit.

Bose George: Hey, everyone. Good morning. Actually 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?

Speaker #5: Retail was up. Was it mixed doing some of that stuff, or were there trends in the quarter that are worth calling out?

Baron Silverstein: I do think it is a little bit of a mix. I also think, you know, there's some competitive pressures overall, you know, with respect to, you know, non-QM. You know, 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, you know, as to where we landed, you know, in Q1. You know, in a lighter origination volume, you know, you would expect that, you know, things would normalize.

Speaker #6: I do think 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.

Speaker #6: And in a lighter origination volume, you would expect that things would normalize.

Bose George: Yeah. Okay, great. That makes sense. Thanks. Then just, quarter to date, is any changes in book value to call out?

Speaker #5: Okay, great. That makes sense. Thanks. And then, just quarter to date, any changes in book value to call out?

Speaker #6: No, Bose. We're essentially flat quarter-to-date.

Michael Nierenberg: No, Bose. We're essentially flat quarter to date.

Bose George: Oh, okay. Great. Thanks.

Speaker #5: Okay. Great. Thanks.

Speaker #4: The next question comes from Doug Harter with BTIG. Please go ahead.

Operator 2: The next question comes from Doug Harder with BTIG. Please go ahead.

Operator: The next question comes from Doug Harder with BTIG. Please go ahead.

Doug Harder: Thanks. Hoping you could talk a little bit more about Ellicor and, you know, bringing in third-party capital, you know, just in kind of reducing the capital commitment down to kind of what you talked about at the time of the deal announcement.

Speaker #1: Thanks. Hoping you could talk a little bit more about Ellicor 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.

Doug Harter: Thanks. Hoping you could talk a little bit more about Ellicor and, you know, bringing in third-party capital, you know, just in kind of reducing the capital commitment down to kind of what you talked about at the time of the deal announcement.

Speaker #3: So we closed a deal on, I think, December 20th or December 19th. So we're one quarter in. Peter alluded to it, but we've created, I think, $40 million of savings in three months.

Michael Nierenberg: We closed the deal on, I think, 20 December or 19 December. We're Q1 in. Peter alluded to it. We've created, I think, $40 million of savings in three months. We're very proud of that. The conversations we've probably had, you know, whether I tell you it's 100 or more LP discussions since we've acquired the portfolio. What I would say we're out, and Peter mentioned, we're out with a potential JV partnership on 1301. We have a JV relationship with Blackstone on 1 market in San Francisco. We have a JV relationship with another party, Beacon, on 1 of the other assets in San Francisco. We'll continue to either do JV relationships, which you'll see us, you know, quite frankly, create gains.

Speaker #3: So we're very proud of that. And the conversations we've probably had, whether I tell you it's 100 or more LP discussions since we've acquired the portfolio.

Speaker #3: What I would say—we're 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.

Speaker #3: 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.

Speaker #3: 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.

Michael Nierenberg: 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. I think it's all TBD, but over the course of the next kinda 9 months or 8 months through the year, it's likely we'll do some JV relationships slash third-party LP relationships, you know, on the assets.

Speaker #3: 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.

Speaker #3: So I think it's all TBD. But over the course of the next kind of nine months or eight months through the year, it's likely we'll do some JV relationships or third-party LP relationships on the assets.

Speaker #1: Got it. And kind of given your view on commercial real estate, is it are you considering kind of deploying additional capital into your two target markets, or is that mostly going to be through kind of the property enhancements you talked about?

Doug Harder: Got it. You know, and, you know, kind of given your view on commercial real estate, are you considering kind of deploying additional capital into your two target markets, or is that mostly gonna be through kind of the property enhancements you talked about?

Doug Harter: Got it. You know, and, you know, kind of given your view on commercial real estate, are you considering kind of deploying additional capital into your two target markets, or is that mostly gonna be through kind of the property enhancements you talked about?

Speaker #3: I think it's both. In the business and we've gotten asked this question in the past, why do we do this deal? When you have the ability to acquire what we think are great assets at cheap prices, you do it.

Michael Nierenberg: I think it's both. You know, in the business and, you know, we've gotten asked this question in the past, why'd we do this deal? When you have, when you have the ability to acquire what we think are great assets at cheap prices, you do it. I think it's that simple on this, on this portfolio. You're 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. You know, buy cheap assets at a, at a very attractive value, these are quality assets. They're not mid-block, you know, they're on the big avenue. We're, we're super pumped about this one.

Speaker #3: And I think it's that simple on this portfolio. You're 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.

Speaker #3: That's how you make the money. Buy cheap assets at a very attractive value. And these are quality assets. They're not mid-block. They're on the big avenue.

Speaker #3: So we're super pumped about this one.

Speaker #1: Great. Appreciate it, Michael. Thank you.

Doug Harder: Great. Appreciate it, Michael. Thank you.

Doug Harter: Great. Appreciate it, Michael. Thank you.

Speaker #3: Thanks, Doug.

Michael Nierenberg: Thanks, Doug.

Speaker #4: The next question comes from Marissa Lobo with UBS. Please go ahead.

Operator 2: The next question comes from Marissa Lobo with UBS. Please go ahead.

Operator: The next question comes from Marissa Lobo with UBS. Please go ahead.

Speaker #7: Good morning. Thanks for taking my questions. Just moving to Genesis—looking at construction loans, about 52% of that book. As tariffs are pushing up labor and material costs, are you seeing any stress on individual projects, or how has underwriting changed there?

Marissa Lobo: Good morning. Thanks for taking my questions. 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 has underwriting changed there?

Michael Nierenberg: You know, our underwriting box is always pretty tight. I don't think that's any different than where we've been overall, you know, since we've, you know, since we've acquired the company. I will tell you know, listen, I'm like everybody else. You look at consumer sentiment, I'm a little bit nervous. I mean, you go out and you buy a sandwich, it's $15. You have to watch out for, I think overall, the state of the consumer. Some of the noise out of DC it gets you a little bit concerned as you think about the so-called build to rent space.

Speaker #3: 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.

Speaker #3: You look at consumer sentiment. I'm a little bit nervous. I mean, you go out and you buy a sandwich. It's 15 bucks. So you have to watch out for, I think, overall, the state of the consumer.

Speaker #3: Some of the noise out of D.C. makes you a little bit concerned as you think about the so-called built-to-rent space. I think seeing the article in the Journal this morning, I think, is a positive, as the administration would like to hopefully peel back some of those thoughts that you have there.

Michael Nierenberg: You know, I think seeing the article in the Journal this morning, I think is a positive as the administration would like, you know, hopefully, you know, peel back some of the thoughts that you have there. But overall credit, you know, we're extremely diligent. The gentleman that runs that business for us, Clint Arrowsmith, does a great job. He, you know, by background, he's a bank credit officer. 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 than I think a lot of the other folks in that space, and we'll maintain discipline around credit. You know, the portfolio, I think is 3%, is the delinquency numbers.

Speaker #3: But overall credit, we're extremely diligent. The gentleman that runs that business for us, Glen Aerosmith, does a great job. He by background, he's a bank credit officer.

Speaker #3: 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.

Speaker #3: 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.

Michael Nierenberg: When you think about the average advance rate, they're typically well below the industry. We feel really good about where we sit there right now. There's been no real change. From a risk standpoint and a discipline standpoint, there's been no deviation to grow origination in lieu of credit.

Speaker #3: 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.

Speaker #4: Thanks for that. 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?

Marissa Lobo: Thanks for that. 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?

Speaker #3: It's a little bit—everything's 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.

Michael Nierenberg: It's a little bit, you know, everything's a little bit more competitive, as I pointed out in, you know, earlier. There's huge demand for ABF products. This is one of the things that falls within that bucket. While saying that, you know, you have points in and points out, and you got different types of fees. Overall, the unlevered yields are still give or take about 10%. When you look at 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. We feel, you know, we love that business right now.

Speaker #3: While saying that, you have points in and points out, and you’ve got different types of fees. So overall, the unlevered yields are still, give or take, about 10%.

Speaker #3: 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.

Speaker #3: So we feel we love that business right now. Thank you.

Marissa Lobo: Thank you.

Michael Nierenberg: Thank you.

Speaker #4: The next question comes from Trevor Cranston with Citizens. Please go ahead.

Operator 2: The next question comes from Trevor Cranston with Citizens. Please go ahead.

Operator: The next question comes from Trevor Cranston with Citizens. Please go ahead.

Speaker #8: All right. Thanks. Good morning. 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?

Trevor Cranston: All right. Thanks. Good morning. You know, when you guys look at the proposed capital rule changes for banks, do you think that has any impact on, you know, 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 at Newrez. Thanks.

Speaker #8: And I guess I was particularly curious about how you think that impacts the correspondent channel at NewRez. Thanks.

Speaker #3: It should help the it should help the MBS market, quite frankly. You got the basis in and around 105 basis points. I think the tights we saw are pretty the conflict in the Middle East was about 90.

Michael Nierenberg: It should help the MBS market, quite frankly. You know, you got the basis in and around 105 basis points. I think the tights we saw pre the, you know, the conflict in the Middle East was about 90. That was the tights. We got out to 125, 130. Historically, you know, being a mortgage bond trader myself, I think stuff seems fair to cheap here. I wouldn't be surprised if the banks come in. You know, I think some of this depends on, you know, the administry, the new Fed chair that's gonna come in in March when he gets elected. He's a little bit more of a inflation hawk.

Speaker #3: That was the tights. We got out to 125, 130. Historically, being a mortgage bond trader myself, I think stuff seems fair to cheap here.

Speaker #3: So I wouldn't be surprised if the banks come in. I think some of this depends on the new treasury secretary that's going to not treasury secretary, the new Fed chair.

Speaker #3: That's going to come in and wash when he gets elected. He's a little bit more of a inflation hawk and we were talking last night about you have a massive deficit in the US.

Michael Nierenberg: You know, we were talking last night about, you know, you have a massive deficit in the US. It's roughly $40 trillion. They're gonna have to continue issuing a lot of, a lot of securities to fund that deficit. The question is that more in the front end than the back end? I think the other thing that, you know, probably some of the bank CIOs are thinking about is inflation. You know, you saw this morning in the UK, you know, I'm looking at bond yields of north of 5%. You look today, you know, the front end of the treasury market's in the 3.80s. 10-year treasuries are now 4.35. I think some of that will play into what the banks do.

Speaker #3: It's roughly $40 trillion. So they're going to have to continue issuing a lot of securities to fund that deficit. The question is, is that more in the front end than the back end?

Speaker #3: I think the other thing that probably some of the banks' CIOs are thinking about is inflation. You saw this morning in the UK, I'm looking at bond yields of north of 5%.

Speaker #3: You look today, the front end of the treasury markets in the 380s. 10-year treasuries are now 435. So I think some of that will play into what the banks do.

Speaker #3: 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.

Michael Nierenberg: Overall, I would think with easier bank rules and the banks having a ton of cash from their deposits, you're gonna 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 know. I mean, honestly. I think it's, you know, they're 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 which was Baron's earlier comment.

Speaker #3: On the servicing side, don't know. 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.

Speaker #3: I think that could continue. We just have to be disciplined about how we originate loans and make sure we're not doing something from market share versus actually making the money to which was Barron's earlier comment.

Speaker #8: Yeah, 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.

Trevor Cranston: Yeah. Okay. That makes sense. You, you know, 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? Are there any platforms, you know, you think that have maybe gotten cheaper that might make sense as a sort of add-on to the existing platform?

Speaker #8: 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?

Michael Nierenberg: You know, 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. You know, when you look, I think there's give or take 10,000 people, including contractors at the mortgage company. You know, Baron and the team are focused on getting really efficient when you look at, you know, the adoption of AI and, you know, some of the partnerships that we've set up as a company. I don't. You know, we don't have a need to buy any another mortgage company. If there is a mortgage company that's out there that's cheap, there's not that many left, quite frankly.

Speaker #3: 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.

Speaker #3: 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.

Speaker #3: I don't we don't have a need 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.

Speaker #3: When you look, Rockets acquired what Rocket acquired Mr. Cooper, which we built at Fortress. We built NewRez. There's just not that many out there that are independent now.

Michael Nierenberg: When you look, Rocket's acquired, you know, what Rocket acquired Mr. Cooper, which we built at Fortress. We built Newrez. You know, there's just not that many out there that are independent now. You have United Wholesale, but overall, I think we don't need anything more.

Speaker #3: You have United Wholesale, but overall, I think we don't need anything more.

Speaker #8: Okay. Appreciate the comments. Thank you.

Trevor Cranston: Okay. Appreciate the comment. Thank you.

Speaker #3: Thank you.

Michael Nierenberg: Thank you.

Speaker #4: The next question comes from Kenneth Lee with RBC Capital Markets. Please go ahead.

Operator 2: The next question comes from Kenneth Lee with RBC Capital Markets. Please go ahead.

Operator: The next question comes from Kenneth Lee with RBC Capital Markets. Please go ahead.

Speaker #9: Hey, good morning, and thanks for taking my question. Just one on the NewRez side of the business and the potential benefits from AI and efficiency moves there.

Kenneth Lee: Hey, good morning. Thanks for taking my question. Just one on the Newrez side of the business, 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 two, or is it mainly weighted towards the, you know, latter part of 2026? I just want to get a little bit more color around the benefits there. Thanks.

Speaker #9: 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 two, or is it mainly weighted towards the latter part of 2026?

Speaker #9: I just want to get a little bit more color around the benefits there. Thanks.

Speaker #3: Yeah. On the origination side, right, we talked a little bit about Home Vision and our partnership there. So that is going to be you're going to see those benefits materialize coming into the second half of the year.

Baron Silverstein: Yeah. On, on the origination side, right, we talked, I talked a little bit about Homevision, our partnership there. You're gonna see those benefits materialize coming into the H2 of the year. Right. Our, our initial product launch is ahead of schedule, and our, we hope to have those tools in place really going into the Q3.

Speaker #3: All 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.

Speaker #9: Gotcha. 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, wondering if you could just talk a little bit more about color you're seeing around institutional investor demand for direct lending?

Kenneth Lee: Gotcha. Very helpful there. 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. Wondering if you 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? Thanks.

Speaker #9: What are you hearing from clients more recently? Thanks.

Michael Nierenberg: You know, it's interesting. When I was in Asia, you know, with Keith Williams, who runs Crestline, you know, 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. In general, you know, we have all kinds of different funds in the market and capital formation continues. You know, we have to lead with performance.

Speaker #3: It's interesting. When I was in Asia with Keith Williams, who runs Crestline, there's still a lot of demand, what I would say, for direct lending.

Speaker #3: While saying that, I think that's more institutional-based. You're seeing a little bit of a 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.

Speaker #3: 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 LP and you said, "Well, our software exposure is 20%," they may say, "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 their or at Crestline, come out of the old Goldman model.

Michael Nierenberg: You know, if we're that heavily weighted to software and you sat down with an LP and you said, Well, our software exposure is 20%, they may say, like, I don't really wanna do this. I would say that the background of Keith and the team at Crestline, and they go back to, you know, 25 years of. A lot of the folks in that same direct lending space, whether it be the, you know, the folks at Sixth Street, or there, or at Crestline, come out of the old Goldman model. We feel really good about it, and I think you're gonna see more capital being raised around direct lending. They'll continue to do that.

Speaker #3: So we feel really good about it. And I think you're going to see more capital being raised around direct lending. They'll continue to do that.

Kenneth Lee: Gotcha. Very helpful there. Thanks again.

Speaker #9: Gotcha. Very helpful there. Thanks again.

Michael Nierenberg: Thank you.

Speaker #3: Thank you.

Operator 2: The next question comes from Henry Coffey with Wedbush. Please go ahead.

Operator: The next question comes from Henry Coffey with Wedbush. Please go ahead.

Speaker #4: The next question comes from Henry Coffey with Wedbush. Please go ahead.

Henry Coffey: Yeah, good morning, everyone, and thank you for taking my question. The flip side to the complexity issue, and we've all talked about that a lot, is that there's always one business that does well and another that maybe doesn't do so well. Combined, you always end up at a nice spot. If you look at your different businesses, Michael, can you tell us, you know, not to pick on anybody, you know, how do you rank in terms of who's really knocking it out of the park right now and which businesses are facing, you know, legitimate headwinds?

Speaker #10: Yeah. Good morning, everyone, and thank you for taking my question. The flip side to the complexity issue, and we've all talked about that a lot, is that there's always one business that does well and another that maybe doesn't do so well.

Speaker #10: 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?

Michael Nierenberg: You know, I would say, and I don't wanna sound like we're the, you know, I don't wanna tell everybody we're always the best in everything. Overall, I think, you know, everything's performing extremely well. You know, the real estate business, the Paramount, or now known as Ellicor portfolio, is great. The team there, we're so excited to be working together with that team. You know, Baron, there's nobody in our organization that works harder than Baron other than me. No, Baron works his tail off and Baron and his leadership team do a great job around the mortgage company. Clint and, you know, the Genesis team continue to put up great results. The asset management business, I think, is just getting started. You know, we're at $60 billion now, and again, it's not an AUM race.

Speaker #3: 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's performing extremely well.

Speaker #3: The real estate business, the Paramount or now known as Ellicor portfolio is great. The team there were so excited to be working together with that team.

Speaker #3: Barron, there's nobody in our organization that works harder than Barron, other than me. Now, Barron works his tail off, and Barron and his leadership team do a great job around the mortgage company.

Speaker #3: Clinton 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 race.

Michael Nierenberg: We have to perform. When everybody asks us, What else do we need? or, What's next? There's really nothing that's next unless we think we're gonna create an edge in for our LP base. I think, you know. The investment portfolio at Rithm, Charles Sorrentino and the team do a great job. We're all working together a long period of time. We love where we sit in the ecosystem. You know, the if there's anything that kind of bothers us, it's the overall valuation of the, you know, the so-called sum of the parts. In general, I think all the businesses continue to perform really well.

Speaker #3: We have to perform. So when everybody asks us, "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 for our LP base and so I think and then the investment portfolio rhythm.

Speaker #3: Charles Sorrentino 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.

Speaker #3: 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.

Henry Coffey: When you look at the P&L and the EAD calculation, is this pretty much the way the business is gonna look with some improvements in efficiency? Is this sort of the new overhead level?

Speaker #10: More pedantically, 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?

Speaker #10: Is this sort of the new overhead level?

Michael Nierenberg: No, I think we're always looking at overhead. We're always looking at ways to become more efficient. EAD needs to grow. That'll hopefully grow as the asset management business grows, so we get more efficient. We're always looking at headcount. We're always looking at ways to become more efficient. You know, the mortgage company does what? $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. I think it's not just people-wise, quite frankly, it's processes-wise. It's processes. I think you're gonna see that with AI changing the mortgage industry. We're excited about that.

Speaker #3: 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'll grow, hopefully, grow as the asset management business grows and we get more efficient.

Speaker #3: But we're always looking at headcount. We're always 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.

Speaker #3: When you think about it, if we net, give or take, about a billion dollars-ish, there's a lot of room to actually get more efficient there.

Speaker #3: 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.

Speaker #3: 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.

Michael Nierenberg: In general, we look at everything. Asset management fees should grow over time as we continue to perform for our clients.

Henry Coffey: $87 million in depreciation, is that the new run rate, or is there some new extra items in there?

Speaker #10: 87 million in depreciation. Is that the new run rate, or is there some new extra items in there?

Nick Santoro: Henry, that's a little bit higher than the run rate. That includes both the Adore portfolio as well as Elecor. As we sell down the Adore portfolio, you could expect that number to come to around $60, 65 million a quarter.

Speaker #2: Henry, that's a little bit high than the run rate. That includes both the ADOR portfolio as well as Ellicor. So as we sell down the ADOR portfolio, you could expect that number to come to around 60, 65 million a quarter.

Michael Nierenberg: The Adore portfolio.

Speaker #3: And the ADOR portfolio, just for everybody's edification, that's our single-family rental business as I pointed out. We have a few thousand units or a couple thousand units, and that continues to get sold down retail.

Henry Coffey: Right.

Michael Nierenberg: Just for everybody's edification, that's our single-family rental business. You know, as I pointed out, we have a few thousand units or a couple thousand units, and that continues to get sold down retail.

Henry Coffey: Thank you very much.

Speaker #10: Thank you very much.

Michael Nierenberg: Thanks, Henry.

Speaker #3: Thanks, Henry.

Operator 2: This concludes our question and answer session. I would like to turn the conference back over for any closing remarks.

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

Speaker #4: This concludes our question and answer session. I would like to turn the conference back over for any closing remarks.

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

Speaker #3: Thanks for everybody dialing in. Thanks for your questions. Thanks for your support. Look forward to updating you on another quarter here in the near future.

Speaker #3: Have a great day.

Operator 2: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

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

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