Slide 1: Quarterly Supplement Q2 2023
Rithm Capital Quarterly Supplement Q2 2023 Q2 2023 Quarterly Supplement
Slide 2: Disclaimers
Disclaimers IN GENERAL. This disclaimer applies to this document and the verbal or written comments of any person presenting it. This document, taken together with any such verbal or written comments, is referred to herein as the “Presentation.” FORWARD-LOOKING STATEMENTS. Certain statements regardi
Slide 3: Rithm's Strategic Growth
Rithm’s Strategic Growth Rithm’s track record over the past 10 years has made us a leader in the real estate and financial services sector ‒ Launched the platform in 2013 under Fortress Investment Group to capitalize on investment opportunities in the real estate and financial services space ‒ What
Slide 4: Q2'23 Financial Highlights
Q2’23 Financial Highlights GAAP Net Income: $357.4 Million / $0.74 per Diluted Share(1) Book Value: $12.16 per Common Share(6) Earnings Available for Distribution: as of June 30, 2023 $297.9 Million / $0.62 per Diluted Share(1)(2) - Includes a realized gain of $0.20 related to the sale of excess MSR
Slide 5: The Evolution of Rithm
The Evolution of Rithm The agreement to acquire Sculptor follows numerous value-add transactions the Rithm team has executed over the last decade SPRINGCASTLE MSRs Europe 2013 2015 2017 2018 2019 2021 2022 2023 • Becomes • Grows • Acquires • Acquires • Enhances its • Gains • Internalizes • Launches
Slide 6: Rithm Experience Across Asset Classes
Rithm Experience Across Asset Classes Through its lifecycle, Rithm has invested in several asset classes across the real estate and financial services sectors Sector Overview Rithm Experience Sourcing and acquisition of residential real estate loans (e.g., Agency, • Rithm Loan Portfolio Residential
Slide 7: Overhaul of Bank Regulations Opens Door to Opportunities
Overhaul of Bank Regulations Opens Door to Opportunities Proposed bank regulations are the most significant in over a decade • We believe we are at a transition point in tightening – from monetary to regulatory • Regulations opens up over $1.5-2tr funding needs with $170bn in additional capital requ
Slide 8: Sculptor Transaction Details
Sculptor Transaction Details Overview • Rithm is acquiring Sculptor Capital Management, Inc. (NYSE: SCU) and its operating subsidiaries ‒ Alternative asset manager with ~$34bn under management as of July 1, 2023 ‒ Strategies include opportunistic credit, institutional credit, real estate and multi-s
Slide 9: Sculptor Transaction Summary & Rationale
Sculptor Transaction Summary & Rationale The acquisition of Sculptor accelerates Rithm’s growth as an alternative asset manager(1) Significant Expansion into Asset Strong Alignment of Interests and Management Value-Additive for Rithm Shareholders • ~$34bn of AUM diversified across the • Potential to
Slide 10: Rithm 2.0
Rithm 2.0 Rithm is focused on maintaining strong performance across our existing portfolio while expanding our private capital business to drive our next phase of growth Rithm actively manages operating companies and a portfolio of yield-oriented Driving growth through private assets totaling $7.1bn
Slide 11: Q2'23 Segment Performance
Q2’23 Segment Performance Q2 2023 Quarterly Supplement
Slide 12: Mortgage Company Overview
Mortgage Company Overview Our balanced platforms generated another profitable quarter, with all channels well positioned for current environment(1) Business Overview Key Q2’23 Metrics $mm Pre-Tax Income $326.9mm $402bn $9.9bn Servicing $357.3 Total Pre-Tax In-House Servicing Funded Origination Incom
Slide 13: Mortgage Company Activity & Business Highlights
Mortgage Company Activity & Business Highlights Focus on driving growth in our third-party servicing and origination businesses Servicing: Mortgage Company Portfolio Servicing: $598bn Total Rithm Portfolio(1) ($bn UPB) ($bn UPB) $498 $504 $503 $504 $506 Third-Party Agency MSRs $87 $91 $93 $94 $96 $8
Slide 14: Rithm MSR Portfolio Summary
Rithm MSR Portfolio Summary Rithm has significant investments in MSRs with beneficial earnings power in an elevated interest rate environment MSR Portfolio Activity & Outlook • MSR portfolio totaled $598 billion UPB as of June 30, 2023(1) – 89% Full MSRs / 11% Excess MSRs • Mortgage Company servicin
Slide 15: Rithm MSR Values
Rithm MSR Values 99% of our Full MSR portfolio is out of the money to refinance with a portfolio WAC of ~3.8%, significantly below current new production(1) Full MSR Price & Multiples Full MSR Portfolio Speeds & Amortization $540 During Q2’23, average portfolio speeds picked up modestly 33.0 200 6.0
Slide 16: Residential Transitional Lending
Residential Transitional Lending Genesis is focused on originating high-quality loans to strong sponsors and maintaining robust credit standards Business Highlights Credit Overview • $556mm Q2’23 origination volume ($905mm YTD), • Floating-rate nature of Genesis products protects asset-level returns
Slide 17: Consumer Loan Portfolio
Consumer Loan Portfolio Rithm seeks to opportunistically invest in bulk consumer loan portfolios as the strategy has provided differentiated and attractive returns over time Marcus Prosper SpringCastle • In June 2023, Rithm invested $145 • In February 2017, Rithm became • In April 2013, Rithm invest
Slide 18: Single-Family Rental
Single-Family Rental Rithm is actively managing its SFR portfolio and is focused on strengthening operating and occupancy metrics(1) Portfolio Overview Q2’23 Activity • Sourced several build-to-rent acquisition opportunities through builder Portfolio relationships and added over 400 properties to th
Slide 19: Servicer Advances
Servicer Advances Rithm maintains significant excess servicer advance capacity Advance Balances • Servicer advance balances as of June 30, 2023 were approximately $2.9 billion • Outstanding advance balances are financed with(1): – $2.4 billion of debt ($1.2 billion in capital markets) – Advance fina
Slide 20: Appendix
Appendix Q2 2023 Quarterly Supplement
Slide 21: Condensed Consolidated Balance Sheets
Condensed Consolidated Balance Sheets (dollars in thousands, except per share data) As of 6/30/23 As of 3/31/23 (Unaudited) (Unaudited) ASSETS Mortgage servicing rights and mortgage servicing rights financing receivables, at fair value $ 8,688,556 $ 8,886,209 Real estate and other securities ($8,722
Slide 22: Book Value per Share Summary
Book Value per Share Summary Per Share Ending Q1’23 Book Value Per Share $11.67 Net Income (Loss) (Net of Tax and Change in Fair Value) 0.70 MSR Realization of Cash Flows (0.29) Change in Valuation Inputs and Assumptions 0.33 GAAP Net Income 0.74 Other Comprehensive Income (0.00) Common Dividend (0.
Slide 23: Consolidated Statements of Operations
Consolidated Statements of Operations Three Months Ended June 30, March 31, Unaudited (dollars in thousands) 2023 2023 Revenues Servicing fee revenue, net and interest income from MSRs and MSR financing receivables $ 465,562 $ 469,839 Change in fair value of MSRs and MSR financing receivables (inclu
Slide 24: Segment Information (Q2'23)
Segment Information (Q2’23) Residential Securities, Origination and Servicing Properties and Loans (dollars in thousands) Properties & Residential Mortgage MSR Related Real Estate Mortgage Consumer Loans Quarter Ended June 30, 2023 Origination Servicing Investments Securities Loans Loans Receivable
Slide 25: Segment Information (Q1'23)
Segment Information (Q1’23) Residential Securities, Origination and Servicing Properties and Loans Properties & (dollars in thousands) Residential Mortgage MSR Related Real Estate Mortgage Consumer Loans Quarter Ended March 31, 2023 Origination Servicing Investments Securities Loans Loans Receivable
Slide 26: Mortgage Servicing Rights
Mortgage Servicing Rights (dollars in thousands) MSRs Balance as of March 31, 2023 $ 8,886,209 Purchases - Originations 202,303 Proceeds from sales (421,988) Change in fair value due to: Realization of cash flows (139,410) Change in valuation inputs and assumptions 161,442 Balance as of June 30, 202
Slide 27: Servicing and Origination
Servicing and Origination Q2’22 Q3’22 Q4’22 Q1’23 Q2’23 Servicing Servicing Portfolio (UPB $bn) In-House Servicing $400.5 $402.5 $401.9 $401.4 $401.6 On Behalf of Third-Parties $86.7 $91.5 $93.0 $94.1 $95.6 Whole Loan & Other $10.8 $9.6 $8.6 $8.6 $8.8 Total UPB $498.0 $503.6 $503.6 $504.0 $506.0 Ori
Slide 28: Unaudited GAAP Reconciliation of Earnings Available for Distribution
Unaudited GAAP Reconciliation of Earnings Available for Distribution Management uses Earnings Available for Distribution, which is a Non-GAAP measure, as one measure of operating performance. Please see next slide for the definition of Earnings Available for Distribution. (dollars in thousands, exce
Slide 29: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures • The Company has five primary variables that impact its operating performance: (i) the current yield earned on the Company’s investments, (ii) the interest expense under the debt incurred to finance the Company’s investments, (iii) the Company’s operati
Slide 30: Endnotes
Endnotes Q2 2023 Quarterly Supplement
Slide 31: Endnotes
Endnotes Endnotes to Slide 3: 1) On June 17, 2022, Rithm entered into an Internalization Agreement with our former manager, an affiliate of Fortress Investment Group (the "Former Manager"), pursuant to which the management agreement with the Former Manager was terminated effective on such date. 2) B
Slide 32: Endnotes (Cont.)
Endnotes (Cont.) Endnotes to Slide 10: 1) Based on management’s current views and estimates and actual results may vary materially. See “Disclaimers” at the beginning of this Presentation for more information on forward looking statements. 2) Rithm announced entry into a definitive agreement under w
Slide 33: Endnotes (Cont.)
Endnotes (Cont.) Endnotes to Slide 19: Source: Company filings and data. Financial data as of June 30, 2023 unless otherwise noted. 1) Represents par value of advances and related debt obligations inclusive of a non-controlling interest ownership of ~11% in the Advance Purchaser portfolio. 2) PLS in
Slide 34: Abbreviations
Abbreviations Abbreviations: This Presentation may include abbreviations, which have the • MSR – Mortgage Servicing Right following meanings: • MTM – Mark to Market • 60+ DQ – Percentage of loans that are delinquent by 60 days or more • Original UPB – UPB at Time of Securitization • Age (mths) or Lo
Slide 35: Q2 2023 Quarterly Supplement
Q2 2023 Quarterly Supplement