Q2 2026 Rithm Property Trust Inc Earnings Call
Speaker #1: Thank you for standing by. At this time, I would like to welcome everyone to the Rhythm Property Trust Q2 2026 earnings call. All lines have been placed on mute to prevent any background noise.
Speaker #1: After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star, followed by the number 1 on your telephone keypad.
Speaker #1: If you would like to withdraw your question, press star 1 again. Thank you. I would now like to turn the call over to Emma Hulke, Deputy General Counsel.
Speaker #1: Thank you for standing by. At this time, I would like to welcome everyone to the Rithm Property Trust Q2, 2026 earnings call. All lines have been placed on mute to prevent any background noise.
Speaker #1: You may begin.
Speaker #2: Thank you, and good evening, everyone. I would like to thank you for joining us today for Rhythm Property Trust Q2 2026 earnings call. Joining me today are Michael Nierenberg, Chief Executive Officer of Rhythm Capital and Rhythm Property Trust, and Nick Santoro, Chief Financial Officer of Rhythm Capital and Rhythm Property Trust.
Speaker #1: After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question, during this time, simply press star, followed by the number 1 on your telephone keypad.
Speaker #2: Throughout the call, we're going to reference the earnings supplement that was posted this afternoon to the Rhythm Property Trust website, www.rhythmpropertytrust.com. If you've not already done so, I'd encourage you to download the presentation now.
Speaker #1: If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to Emma Hulke, Deputy General Counsel.
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 #1: You may begin.
Speaker #2: Thank you, and good evening, everyone. I would like to thank you for joining us today for the Rithm Property Trust Q2 2026 earnings call. Joining me today are Michael Nierenberg, Chief Executive Officer of Rithm Capital and Rithm Property Trust, and Nick Santoro, Chief Financial Officer of Rithm Capital and Rithm Property Trust.
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-GAAP financial measures during today's call, reconciliations of these measures to the most directly comparable GAAP measures can be found in our earnings supplement, with that, I will turn the call over to Michael.
Speaker #2: Throughout the call, we're going to reference the earnings supplement that was posted this afternoon to the Rithm Property Trust website, www.rithmpropertytrust.com. If you have 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 #3: good evening, everyone. so we're going to chat about Rhythm Property Trust. I'll give you my, my opening comments, then we'll talk we'll go through the supplement, and then we'll open up for some Q&A.
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 #3: thanks for joining the call. Since we, since Rhythm took over the management of the contract, which was formerly known as Great Ajax, we've transformed this company pretty dramatically.
Speaker #2: 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.
Speaker #3: We changed the name from Great Ajax to Rhythm Property Trust, set out an emission to actually grow this into a dedicated commercial real estate, vehicle.
Speaker #2: With that, I will turn the call over to Michael.
Speaker #3: Good evening, everyone. So, we're going to chat about Rithm Property Trust. I'll give you my opening comments, then we'll talk— we'll go through the supplement, and then we'll open up for some Q&A.
Speaker #3: during that time, we have improved liquidity. We've cleaned up the balance sheet. We grew earnings, so the company no longer loses money. During the quarter, in Q2 and subsequent to Q2, we've invested in multifamily transitional loans, which are which have been originated by our affiliate, Genesis Capital, with the intent to grow earnings and transform the business further.
Speaker #3: Thanks for joining the call. Since we— since Rithm took over the management of the contract, which was formerly known as Great Ajax, we've transformed this company pretty Ajax to Rithm Property Trust, set out on a mission to actually grow this into a dedicated commercial real estate vehicle.
Speaker #3: We've also attempted, during the quarter, up, up a few a couple weeks back, to raise equity in the public markets. And based on the stock performance at the time, and some of the shorts that were put into the, in, in the market by, by the hedge funds, we decided it was in the best interest of shareholders to pull the offering.
Speaker #3: During that time, we have improved liquidity, we've cleaned up the balance sheet, we grew earnings so the company no longer loses money. During the quarter, in Q2, and subsequent to Q2, we've invested in multifamily transitional loans, which are— which have been originated by our affiliate, Genesis Capital, with the intent to grow earnings and transform the business further.
Speaker #3: To grow the company, quite frankly, we'll need to raise capital. In the event we're not able to do so, we'll explore our, you know, different avenues, which could include buying back equity, M&A, or even as, as well as tendering for the shares of the underlying company.
Speaker #3: We've also attempted, during the quarter— about a couple of weeks back— to raise equity in the public markets. And based on the stock performance at the time, and some of the shorts that were put into the market by the hedge funds, we decided it was in the best interest of shareholders to pull the offering.
Speaker #3: our, our whole goal here is to protect our shareholders, figure out ways that we could actually either grow the company but, more importantly, make money for our shareholders.
Speaker #3: So with that, I'll, I'll refer to the supplement, which has been posted online. We'll start on page 3. We have a few short pages, but I think the real story is here.
Speaker #3: To grow the company, quite frankly, we'll need to raise capital. In the event we're not able to do so, we'll explore different avenues, which could include buying back equity, M&A, or even— as well as tendering for the shares of the underlying company.
Speaker #3: We have a very, very clean balance sheet, which is very different than a lot of mortgage rates out there. we've, you know, we've, we've gotten the company from where it was not making any money and actually losing money to where today it's break even.
Speaker #3: And now, the path forward has to be where we could grow earnings and, and grow the capital base. When you think about Rhythm Property Trust, it's managed by an affiliate of Rhythm, you know, which is, quite frankly, us.
Speaker #3: Our whole goal here is to protect our shareholders, figure out ways that we could actually either grow the company, but more importantly, make money for our shareholders.
Speaker #3: So, with that, I'll— I'll refer to the supplement, which has been posted online. We'll start on page 3. I'll give a few short pages.
Speaker #3: Rhythm has $9 billion of permanent capital, north of $100 billion of assets. It's led by our seasoned team here, who've been working together for many, many years.
Speaker #3: But I think the real story is here: we have a very, very clean balance sheet, which is very different than a lot of mortgage REITs out there.
Speaker #3: in at both Rhythm and, going back to the, to the Great Ajax, when we took over Great Ajax. When we look at the pipeline, we have a world-class origination business in Genesis Capital.
Speaker #3: Company, from where it was not making any money and actually losing money, to where today it's break-even. And now, the path forward has to be where we could grow earnings and grow the capital base.
Speaker #3: That makes these residential transition loans, as well as multifamily, transition loans, currently today, we have and, you know, the origination business at Genesis supplies loans to funds, to third-party funds, to different SMAs.
Speaker #3: When you think about Rithm Property Trust, it's managed by an affiliate of Rithm, you know, which is, quite frankly, us. Rithm has $9 billion of permanent capital, and north of $100 billion of assets.
Speaker #3: It's led by our seasoned team here, who've been working together for many, many years. In— at both Rithm and going back to the— to the Great Ajax, when we took over Great Ajax.
Speaker #3: We have, as well as to the Rhythm balance sheet, and now we're doing it with Rhythm Property Trust. these loans are very high coupon, short duration.
Speaker #3: senior loans, which, which we think are great for this vehicle, and, and hopefully we could figure out a way to raise capital to grow the vehicle.
Speaker #3: When we look at the pipeline, we have a world-class origination business in Genesis Capital that makes these residential transition loans, as well as multifamily transition loans. Currently, today, we have— and, you know, the origination business at Genesis supplies loans to funds, to third-party funds, to different SMAs we have, as well as to the Rithm balance sheet.
Speaker #3: when we look at our dividend yield, we're currently at 10%. And again, we have no legacy commercial real estate exposure, which differentiates us, I think, from the PAC in the in the in the commercial real estate space.
Speaker #3: When you look at Q2 financial highlights, essentially, earnings were flat. Book value, is $30.17, which is comparable to where it was the quarter before, which I think was $30.33.
Speaker #3: And now we're doing it with Rithm Property Trust. These loans are very high-coupon, short duration senior loans, which we think are great for this vehicle, and hopefully we can figure out a way to raise capital to grow the vehicle.
Speaker #3: So overall, flat. dividend paid is $36 for dividend yield at 10%. priorities. How do we unlock shareholder value? How do we create real value out of this vehicle?
Speaker #3: When we look at our dividend yield, we're currently at 10%. And again, we have no legacy commercial real estate exposure, which differentiates us, I think, from the pack in the commercial real estate space.
Speaker #3: How do we reset the vehicle that is truly what our goal is? When we look at page 5, the strategic evolution, I pointed out, how we took over the management contract from Great Ajax.
Speaker #3: When you look at Q2 financials, essentially earnings were flat. Book value is $30.17, which is comparable to where it was the quarter before, which I think was $30.33.
Speaker #3: We took it from where it was losing a little under $10 million. for on, on a quarterly basis to where it's break even. we've taken actions to position the vehicle for growth.
Speaker #3: So overall, flat. Dividend paid is $36, for a dividend yield of 10%. Priorities: how do we unlock shareholder value? How do we create real value out of this vehicle?
Speaker #3: We've sold down, you know, the legacy assets that we don't think we can make money on here. And then again, the future state of this is to actually figure out a way to either grow capital or, at some point, potentially retire the vehicle.
Speaker #3: How do we reset the vehicle? That is truly what our goal is. When we look at page 5, the strategic evolution, I pointed out how we took over the management contract from Great Ajax.
Speaker #3: bottom part of the page, you can look at the balance sheet between, you know, Q2 of '24 and Q2 of '26. Very, very clean and, and I would tell you that we have a world-class investment team managing this vehicle.
Speaker #3: We took it from where it was losing a little under $10 million, on a quarterly basis, to where it's break even. We've taken actions to position the vehicle for growth.
Speaker #3: Page 6 talks about what we've done in the in Q2. This is just the profile of the assets purchased by, Rhythm Property Trust. $117 million of, of, RTL and MTL loans.
Speaker #3: We've sold down, you know, the legacy assets that we don't think we can make money on here. And then again, the future state of this is to actually figure out a way to either grow capital or, at some point, potentially retire the vehicle.
Speaker #3: $9.1% gross WAC. about 14%. could have future funding down the road, so what that ac effectively means is we're, we, we're not in any chase to actually replace the assets as they, amortize down.
Speaker #3: On the bottom part of the page, you can look at the balance sheet between, you know, Q2 of '24 and Q2 of '26. Very, very clean, and I would tell you that we have a world-class investment team managing this vehicle.
Speaker #3: Advance rate on the underlying, assets are 75%, and the dollar price paid a little bit under 1:1 with a cost of funds of about $565.
Speaker #3: Page 6 talks about what we've done in Q2. This is just the profile of the assets purchased by Rithm Property Trust: $117 million of RTL and MTL loans, 9.1% gross WAC, very, very short duration, leveraged return of about 14%.
Speaker #3: So that really is the story here. It's the story of, of resetting this vehicle, growing raising capital so we could actually deploy capital and grow earnings.
Speaker #3: To the extent that we can, we'll have to explore alternative, avenues to figure out a way to maximize shareholder value. One of the, the main reason we did not do the, the equity offering, was it was substantially below the dollar price where the, equity is trading today.
Speaker #3: Could have future funding down the road, so what that effectively means is we're not in any chase to actually replace the assets as they amortize down.
Speaker #3: Advance rate on the underlying assets is 75%, and the dollar price paid is a little bit under 1:1, with a cost of funds of about $565.
Speaker #3: So with that, I'll turn it back to the operator. We'll open up for Q&A and, and hopefully we could figure out a way to reset the vehicle.
Speaker #3: So, that really is the story here. It's the story of resetting this vehicle, growing—raising capital so we could actually deploy capital and grow earnings.
Speaker #2: At this time, I would like to remind everyone in order to ask a question, press star, then the number 1 on your telephone keypad.
Speaker #3: To the extent that we can, we'll have to explore alternative avenues to figure out a way to maximize shareholder value. One of the— the main reason we did not do the equity offering was it was substantially below the dollar price where the equity is trading today.
Speaker #2: And your first question comes from Tom Catherwood with BTIG. Please go ahead.
Speaker #4: Thanks. And, and good afternoon, Michael. Just wanted to wanted to touch on this. You added on, on slide 5, the future state. You added this comment about explore opportunities to enhance shareholder value, which is different than the wording you've used in the past.
Speaker #3: So, with that, I'll turn it back to the operator. We'll open up for Q&A and hopefully we can figure out a way to reset the vehicle.
Speaker #4: W-what exactly does that entail? And, and why not follow Apollo and KKR in their CMRE vehicles a-and conduct a formal strategic review?
Speaker #2: At this time, I would like to remind everyone: in order to ask a question, please press star, then the number 1 on your telephone keypad.
Speaker #2: And your first question comes from Tom Catherwood with BTIG. Please go ahead.
Speaker #3: so here's what I would say. Apollo's vehicle is different. It was a la much larger capital base. and I think the direction of that organization and I can't speak for their leadership team, is probably a little bit different.
Speaker #1: Thanks, and good afternoon, Michael. Just wanted to—wanted to touch on this. You added on slide 5 the future state. You added this comment about exploring opportunities to enhance shareholder value, which was different than the wording you've used in the past.
Speaker #3: We're still in a position where we'd like to see us reset or grow this vehicle. as we look at, KKR, the you know, that vehicle was definitely not as clean, as anything that we have on ours.
Speaker #1: What exactly does that entail? And why not follow Apollo and KKR in their CMRE vehicles and conduct a formal strategic review?
Speaker #3: you know, our whole goal here is how do we create real shareholder value. We took over this thing. Book value is substantially higher than where the equity is trading.
Speaker #3: So, here's what I would say. Apollo's vehicle is different. It was a much larger capital base. And I think the direction of that organization— and I can't speak for their leadership team— is probably a little bit different.
Speaker #3: But while saying that, it's you know, this will be a board decision as far as what, you know, the direction of what we do here, whether this thing gets cleaned up, whether we tender for shares, whether we do try to do M&A deals, etc.
Speaker #3: We're still in a position where we'd like to see us reset or grow this vehicle. As we look at KKR, you know, that vehicle was definitely not as clean as anything that we have on ours.
Speaker #3: I think when we did this initially, we did this with the intent of trying to grow the vehicle. Clearly, we haven't been able to do that.
Speaker #3: And obviously, that's been illustrated by the rate the latest attempt to raise equity. And there's no lack of effort on this. So, it'll be a board thing.
Speaker #3: You know, our whole goal here is: How do we create real shareholder value? We took over this thing. Book value is substantially higher than where the equity is trading.
Speaker #3: in the meantime, if we could raise some equity here, that would be great. But if not, you know, we'll le we'll go back to the board and we'll try to figure out the best way to, to clean this thing up.
Speaker #3: But while saying that, it's, you know, this will be a board decision as far as what, you know, the direction of what we do here, whether this thing gets cleaned up, whether we tender for shares, whether we do— try to do M&A deals, etc.
Speaker #4: Got it. Got it. Appreciate it. And then maybe sticking on that whole concept of growing the vehicle, we're trying to figure out how much more investment capacity the balance sheet can support.
Speaker #3: I think when we did this initially, we did it with the intent of trying to grow the vehicle. Clearly, we haven't been able to do that.
Speaker #4: And I think you've got, $111 million of future funding for the Genesis loans that you took on this quarter, which at a 75% advance rate is, is roughly $28 million of equity.
Speaker #3: And obviously, that's been illustrated by the latest attempt to raise equity. And there's no lack of effort on this. So, it'll be a board thing.
Speaker #3: In the meantime, if we can raise some equity here, that'll be great. But if not, you know, we'll go back to the board and we'll try to figure out the best way to clean this thing up.
Speaker #4: what's the minimum cash balance you're comfortable carrying? A-and how much equity is left in the $84 million of, of CMBS loans that could be redeployed into these Genesis loans?
Speaker #1: Got it. I appreciate it. And then maybe, sticking with that whole concept of growing the vehicle, we're trying to figure out how much more investment capacity the balance sheet can support.
Speaker #3: there's something north of, I of north of $50 million I believe in, in common right now or, or I shouldn't say in common. in, in equity, that remains, in the vehicle.
Speaker #1: And I think you've got $111 million of future funding for the Genesis loans that you took on this quarter, which, at a 75% advance rate, is roughly $28 million of equity.
Speaker #3: You know, we could quite frankly, we could do a preferred if we wanted to. We could do another debt deal if we wanted to.
Speaker #3: So you know, we're not fussed about that. Obviously, these things pay down and turn over, so we feel that there's enough liquidity in the vehicle today to, take care of any potential draws that we may see, you know, over the next couple of years.
Speaker #1: What's the minimum cash balance you're comfortable carrying? And how much equity is left in the $84 million of CMBS loans that could be redeployed into these Genesis loans?
Speaker #4: All right. So if it's $50 million of equity, $28 million is already sort of committed to that $111 million. So that leaves you with 20, 22 million.
Speaker #3: There's something north of—north of $50 million, I believe, in common right now—or I shouldn't say in common, in equity, that remains in the vehicle.
Speaker #3: So it's it's $50 million. That a-a-after the deployment of the 20-odd million of, of the loans that, that I believe funded today.
Speaker #3: You know, quite frankly, we could do a preferred if we wanted to. We could do another debt deal if we wanted to.
Speaker #3: So, you know, we're not fussed about that. Obviously, these things pay down and turn over, so we feel that there's enough liquidity in the vehicle today to take care of any potential draws that we may see, you know, over the next couple of years.
Speaker #4: Okay. So, so with that and again, thinking of the same 75% advance rate that you used to take the loans on this past quarter, you could take down another $200 million of, of, of loans from Genesis.
Speaker #4: Is that the near-term plan, or are you holding that liquidity or something else?
Speaker #1: All right. So, if it's $50 million of equity, $28 million is already sort of committed to that $111 million. So, that leaves you with $20, $22 million?
Speaker #3: No. No. No. We'll, we'll keep we'll keep more liquidity. We might deploy a little bit more, a little bit more capital into more loans to try to grow earnings.
Speaker #3: It's $50 million. After the deployment of the $20-odd million of the loans that I believe funded today.
Speaker #3: But the net of it is, if we can't raise equity here or capital, in the near term, we'll go back to the board and we'll have to make a board decision and do something different.
Speaker #1: Okay. So, with that, and again thinking of the same 75% advance rate that you used to take the loans on this past quarter, you could take down another $200 million of loans from Genesis.
Speaker #4: Got it. Appreciate the answers. Thanks, Michael.
Speaker #3: Thank you.
Speaker #2: You're next question comes from line of Craig Cucera with Lucid Capital Markets. Please go ahead.
Speaker #1: Is that the near-term plan, or are you holding that liquidity, or—?
Speaker #5: Yeah. Hey, good evening, guys. you made mention in the deck that you're looking to sell some subordinate positions in several securitizations. can you give us a sense of how much capital that might free up?
Speaker #3: No, no. We'll keep more liquidity. We might deploy a little bit more— a little bit more capital into more loans to try to grow earnings.
Speaker #3: But the net of it is, if we can't raise equity here or capital in the near term, we'll go back to the board, and we'll have to make a board decision and do something different.
Speaker #3: Yeah. We-we're not you know, I think we've sold everything that we can. We got a hold on to a number of these, these retained interests for, you know, for purposes of Dodd-Frank.
Speaker #1: Got it. Appreciate the answers. Thanks, Michael.
Speaker #3: you know, there's some stuff that we could potentially call and then and then liquidate. That would create a, a little bit of a loss here.
Speaker #3: Thank you.
Speaker #2: Your next question comes from the line of Craig Cucera with Lucid Capital Markets. Please go ahead.
Speaker #3: But I think for now, we should assume that whatever has been able to be sold has been sold from the legacy side. I think the total equity remaining and Nick, correct me if I'm wrong, on the reggie sides, give or take about $100 million.
Speaker #4: Yeah. Hey, good evening, guys. You may mention in the deck that you're looking to sell some subordinate positions in several securitizations. Can you give us a sense of how much capital that might free up?
Speaker #3: Is that right?
Speaker #6: $100.70 million equity. Last transaction.
Speaker #3: Yeah. We're not— you know, I think we've sold everything that we can. We've got to hold on to a number of these retained interests for, you know, for purposes of Dodd-Frank.
Speaker #3: So there's so this is not this is not that much there. but most of the bunch is retained interest that we have to hold for, because they were securitized years ago and the coupons are low and they're not in the money now to be called.
Speaker #3: You know, there's some stuff that we could potentially call and then— and then liquidate. That would create a little bit of a loss here.
Speaker #3: I think some of them actually come up here in the fall, just based on time and, and factors. And, and we'll have another hard look at those.
Speaker #3: But I think, for now, we should assume that whatever has been able to be sold has been sold from the legacy side. I think the total equity remaining, and Nick, correct me if I'm wrong, on the reggie side is give or take about $100 million.
Speaker #3: But for now, I would assume they sit here until, until we figure if something different out.
Speaker #3: Is that right?
Speaker #5: Okay. Got it. and, and changing gears, I mean, just given the highly accretive nature of the residential transition loans and the multifamily transition loans, was there any thought to sell an ownership in Paramount back to Rhythm to deploy in more of a higher current yielding product?
Speaker #4: 70 million equity.
Speaker #3: Yeah.
Speaker #4: Last transaction.
Speaker #3: So, this is not— this is not that much there. But most of the ventures retained interest that we have to hold for, because they were securitized years ago, and the coupons are low and they're not in the money now to be called.
Speaker #5: Or do you feel that investing in Paramount is best for the vehicle?
Speaker #3: I think some of them actually come up here in the fall, just based on time and factors. And we'll have another hard look at those.
Speaker #3: I think we did that at a time when we thought we were gonna be able to raise capital, for the vehicle. And we and we, honestly, we were extremely excited about the so-called Paramount/Ellacorp investment.
Speaker #3: But for now, I would assume they sit here until—until we figure something different out.
Speaker #3: while saying that, I, I don't know that that gets us over the hump no matter what we do here. 'cause you, you still need to raise capital.
Speaker #4: Okay. Got it. And changing gears, I mean, just given the highly accretive nature of the residential transition loans and the multifamily transition loans, was there any thought to sell an ownership in Paramount back to Rhythm to deploy in more of a higher current yielding product, or do you feel that investing in Paramount is best for the vehicle?
Speaker #3: The challenge in raising equity and, and this is our second bout of, of trying to raise equity, over the course of the past six months or so, is once you go out with a potential equity offering and we've had a just a, a ton of conversations, and supported by the, you know, what I would say are large money center bank friends who have actually given it, all they can to try to help us raise equity is that as soon as you do that, the stock gets hit.
Speaker #3: I think we did that at a time when we thought we were going to be able to raise capital for the vehicle. And honestly, we were extremely excited about the so-called Paramount/Elocor investment.
Speaker #3: While saying that, I don't know that gets us over the hump, no matter what we do here, because you still need to raise capital.
Speaker #3: You know, we started when the stock was at 14 bucks, and a deal would, would have t-to do a deal would have had to be south of $10.
Speaker #3: The challenge in raising equity, and this is our second bout of trying to raise equity, over the course of the past six months or so, is once you go out with a potential equity offering and we've had a— just a ton of conversations and supported by the, you know, what I would say are large money-centered bank friends who have actually given it all they can to try to help us raise equity, is that as soon as you do that, the stock gets hit.
Speaker #3: And it wouldn't have been distributed and, and we went out where Rhythm was gonna backstop it and it just wouldn't have been a, a good solution for, what I would say Rhythm Property Trust shareholders.
Speaker #3: So yeah, there's the $50 million that sits there and we can deploy a little bit more capital. But we should assume unless we raise equity, that this vehicle and we'll go back to the board and make recommendations.
Speaker #3: Obviously, it'll be a board decision. The vehicle will get cleaned up some way, somehow. Going back to the earlier comments from Tom, would apologize with ARI.
Speaker #3: You know, we started when the stock was at 14 bucks. And a deal would have— to do a deal would have had to be south of $10.
Speaker #5: Okay. Got it. And, just the fact that you had the you were willing to put $200 million in as a backstop, I think m a mix of common and convertible preferred, is some capital raised similar to that?
Speaker #3: And it wouldn't have been distributed and we went out where Rhythm was going to backstop it and it just wouldn't have been a good solution for what I would say Rhythm Property Trust shareholders.
Speaker #5: A possibility or would you need the market's involvement?
Speaker #3: So, yeah, there's the $50 million that sits there. We can deploy a little bit more capital, but we should assume, unless we raise equity, that this vehicle—and we'll go back to the board and make recommendations.
Speaker #3: I no. It's, it's we got plenty yeah. I mean, if you looked at the Rhythm earn-earnings today, as of the end of 6/30, we had 2.1 billion of cash and liquidity.
Speaker #3: Obviously, it'll be a board decision. The vehicle will get cleaned up some way, somehow. Going back to the earlier comments from Tom, would apologize with ARI.
Speaker #3: it's more about, I think, where the equity comes. You know, we're extremely sensitive about taking a $14 stock, issuing equity at $9, and then seeing the stock pop a few dollars.
Speaker #4: Okay, got it. And just the fact that you were willing to put $200 million in as a backstop— I think a mix of common and convertible preferred— has some capital been raised similar to that?
Speaker #3: That doesn't work for shareholders. And that's, you know, that's not who we are.
Speaker #4: Is that a possibility, or would you need the market's involvement?
Speaker #5: Okay. Thanks. That's it for me.
Speaker #3: Thank you.
Speaker #3: I—no, it's—we've got plenty. I mean, if you looked at the Rithm earnings today, as of the end of 6/30, we had $2.1 billion of cash and liquidity.
Speaker #2: You're next question comes from the line of Henry Coffey with Wedbush Securities. Please go ahead.
Speaker #5: good afternoon, everyone. Mike, it seems however hard we push you, the idea of, you know, putting on more assets, putting more on assets, the answer is no, we're not gonna you know, ramp up our leverage beyond anything that's reasonable.
Speaker #3: It's more about, I think, where the equity comes from. You know, we're extremely sensitive about taking a $14 stock, issuing equity at $9, and then seeing the stock pop a few dollars.
Speaker #3: That doesn't work for shareholders. And that's, you know, that's not who we are.
Speaker #5: We need more capital. So and that could come in a lot of different forms. I think we all know that. So I guess A is how quickly would you move on one front or the other?
Speaker #4: Okay, thanks. That's it for me.
Speaker #3: Thank you.
Speaker #2: Your next question comes from the line of Henry Coffey with Wedbush Securities. Please go ahead.
Speaker #5: And B, what is the final clock look like in terms of how you're thinking about this business, whether it should be acquired and folded back into Rhythm, whether it's you know, you should tender for the stock or however you wanna ultimately resolve the thing.
Speaker #4: Good afternoon, everyone. Mike, it seems however hard we push you, on the idea of, you know, putting on more assets, putting more on assets, the answer is no, we're not going to, you know, ramp up our leverage beyond anything.
Speaker #5: But, you know, it's kinda like A, you're gonna get some form of capital in here, or B, you're gonna take it private.
Speaker #4: It's reasonable. We need more capital, and that could come in a lot of different forms—I think we all know that. So, I guess, A is, how quickly would you move on one front or the other?
Speaker #3: Yeah. I think it's a 26 event. We're in, you know, we begin August here. it'll be something that will, you know, will continue to work with our board.
Speaker #4: And B, what does the final clock look like in terms of how you're thinking about this business? Whether it should be acquired and folded back into Rithm, whether you should tender for the stock, or however you want to ultimately resolve the thing.
Speaker #3: to the extent that we could bring in a sleeve of capital, you know, the stock is trading a little bit better here. great. But, I would assume it's a 26 event.
Speaker #5: All right. Thank you.
Speaker #3: Thank you, Henry.
Speaker #4: But you know, it's kind of like: A, you're going to get some form of capital in here; or B, you're going to take it private.
Speaker #2: You're next question comes from the line of Jason Stewart with Compass Point. Please go ahead.
Speaker #5: And thank you. And Michael, you started, I think, address part of my question, which is, you know, how would a raise look different next time?
Speaker #3: Yeah, I think it's a 2026 event. We're in—you know, we begin August here. It'll be something that we'll continue to work with our board on.
Speaker #5: Is there a way to structurally address the perceived market conter concerns? like a wrap or a backstop. And, and I think you started to address that with the, the Rhythm backstop.
Speaker #3: To the extent that we could bring in a sleeve of capital, you know, the stock is trading a little bit better here. Great. But I would assume it's a 26 event.
Speaker #5: Is there any other option on the table that you're considering in terms of structural enhancement?
Speaker #3: I, you know, if you have an idea, call me. I don't I don't I don't I don't kn I, I don't I don't know.
Speaker #4: All right. Thank you.
Speaker #3: Thank you, Henry.
Speaker #2: Your next question comes from the line of Jason Stewart with Compass Point. Please go ahead.
Speaker #3: you know, we've, we've tried to bring in third-party capital alongside this. we've tried to obviously, you know, work through a backstop. you know, the equity is fundamentally extremely cheap.
Speaker #4: All right. Thank you. Michael, you started—I think—addressing part of my question, which is, you know, how would a raise look different next time?
Speaker #4: Is there a way to structurally address the perceived market concerns? Like a wrap or a backstop. And I think you started to address that with the Rithm backstop.
Speaker #3: it's just one of these things. It's there's, there's no float. It's trading a little bit more volume these days. But, you know, with the book value stated book value of 30 bucks and, we do need to reset the vehicle, but you don't wanna reset it with 25 or 50 million bucks 'cause you're gonna be in the same boat, you know, as we go as we look down the road.
Speaker #4: Is there any other option on the table that you're considering in terms of structural enhancement?
Speaker #3: If you have an idea, call me. I don't—I don't know. You know, we've tried to bring in third-party capital alongside this.
Speaker #3: So the idea initially was to go out with a reasonable size offering. Rhythm would r would Rhythm would participate 'cause we believe in it.
Speaker #3: We've tried to, obviously, you know, work through a backstop. You know, the equity is fundamentally extremely cheap. It's just one of these things—there's no float.
Speaker #3: We believe what in what we do. but we need to raise you know, we need to get real participation from others away from, Rhythm.
Speaker #3: And we've had a ton of conversations. There is some participation away. It's a question of where does the equity come.
Speaker #3: It's trading a little bit more volume these days. But, you know, with the book value stated book value of 30 bucks, and we do need to reset the vehicle, but you don't want to reset it with 25 or 50 million bucks because you're going to be in the same boat, you know, as we go— as we look down the road.
Speaker #5: Yeah. Okay. and then I think from the beginning here, we've talked about the potential for, you know, like a, a transformative commercial real estate transaction.
Speaker #5: outside of the Genesis book, i-is it your feeling now that there's just too much capital chasing those opportunities and, and that's unlikely to happen?
Speaker #3: So the idea initially was to go out with a reasonable size offering. Rhythm would— Rhythm would participate because we believe in it. We believe in what we do.
Speaker #5: Or do you think it's still based on the flow you're seeing, it's possible?
Speaker #3: But we need to raise— you know, we need to get real participation from others away from Rithm. And we've had a ton of conversations.
Speaker #3: Yeah. You know, we're, we're doing some different debt deals. I think if you go back to the Rhythm earnings call that we did this morning, and you look at some of the monetizations we, we're, we're in the middle of or things that we've done, you know, we, we had put out prior to, you know, and we did that of Rhythm, we put out a couple hundred million.
Speaker #3: There is some participation away. It's a question of where does the equity come from.
Speaker #4: Yeah, okay. And then I think from the beginning here, we've talked about the potential for, you know, like a transformative commercial real estate transaction.
Speaker #3: Those returns have been very good on both the debt and equity stuff that we've done there. we're hunting. And it doesn't have to be specific to office, quite frankly.
Speaker #4: Outside of the Genesis book, is it your feeling now that there's just too much capital chasing those opportunities and that it's unlikely to happen? Or do you think it's still, based on the flow you're seeing, possible?
Speaker #3: We're looking at some public company stuff. We're looking at some private company stuff. And I think the runway alone, even in the Genesis business, gives us, plenty, plenty of ability to create kinda mid-teams levered assets, with real cash flow that hopefully we could figure out ways to fund those in RPT.
Speaker #3: Yeah. You know, we're doing some different debt deals. I think if you go back to the morning and you look at some of the monetizations we're in the middle of, or things that we've done, you know, we had put out prior to—you know, and we did that off Rithm.
Speaker #3: you know, some of that stuff goes in funds now. Some of it, you know, sits on Rhythm balance sheet. But that's what we're working towards.
Speaker #3: We put out a couple hundred million. Those returns have been very good on both the debt and equity stuff that we've done there. We're hunting.
Speaker #3: So I think there's plenty of stuff to look at. Banks are back in lending. I think that's very healthy for the market. But, there's opportunities.
Speaker #3: And it doesn't have to be specific to office, quite frankly. We're looking at some public company stuff, we're looking at some private company stuff.
Speaker #3: You know, we work with our broker friends. We see we see a ton of different things. We just gotta figure out what's right.
Speaker #3: And I think the runway alone, even in the Genesis business, gives us plenty of ability to create kind of mid-teens levered assets with real cash flow. Hopefully, we could figure out ways to fund those in RPT.
Speaker #5: Okay. Thank you.
Speaker #3: Thanks, Jason.
Speaker #2: There are no further questions at this time. I'll now turn the call back over to Michael Nierenberg for closing remarks.
Speaker #3: appreciate everybody's, thoughtful questions. if you have any real good ideas that we're not thinking about, quite frankly, give us a buzz and we're always happy to listen.
Speaker #3: You know, some of that stuff goes in funds now. Some of it, you know, sits on Rhythm balance sheet. But that's what we're working towards.
Speaker #3: So I think there's plenty of stuff to look at. Banks are back in lending. I think that's very healthy for the market. But there are opportunities.
Speaker #3: we wanna protect our shareholders in this one and not just, you know, come out and do a deal that doesn't make any sense to the extent that we could get a deal done, we will.
Speaker #3: You know, we work with our broker friends. We see it. We see a ton of different things. We just got to figure out what's right.
Speaker #3: And if not, we'll, we'll, we'll try to figure out what plan B is. and I and our intent is to have all that stuff done by the end of the year, no later than the end of the year.
Speaker #4: Okay. Thank you.
Speaker #3: Thanks, Jason.
Speaker #2: There are no further questions at this time. I will now turn the call back over to Michael Nierenberg for closing remarks.
Speaker #3: With that said, have a great rest of the summer. and appreciate your, your thoughtful questions. Take care. Bye-bye.
Speaker #3: I appreciate everybody's thoughtful questions. If you have any really good ideas that we're not thinking about, quite frankly, give us a buzz, and we're always happy to listen.
Speaker #3: We want to protect our shareholders in this one and not just, you know, come out and do a deal that doesn't make any sense. To the extent that we could get a deal done, we will.
Speaker #3: And if not, we'll try to figure out what plan B is. Our intent is to have all that stuff done by the end of the year—no later than the end of the year.
Speaker #3: With that said, have a great rest of the summer. And appreciate your thoughtful questions. Take care. Bye-bye.
