Rithm Capital Corp. · NYSE:RITM
Rithm Capital — Q4 2023 Earnings Presentation
40 slides from Rithm Capital's earnings presentation, Feb 7, 2024
Slide 1: Quarterly Supplement Q4 & Full Year 2023
Rithm Capital Quarterly Supplement Q4 & Full Year 2023 Q4 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: The Start Of A New Chapter
The Start Of A New Chapter Rithm is a leading global asset management business focused on delivering significant, long-term value Powered by CAPITALIZING ON THE POWER OF PARTNERSHIP Partnership A DECADE OF PERFORMANCE DRIVEN BY BROAD EXPERTISE A FOCUSED STRATEGY A NEW CHAPTER $35 Billion Specialty F
Slide 4: Financial Highlights: Q4 & Full Year 2023
Financial Highlights: Q4 & Full Year 2023 BOOK VALUE $11.90 Per Common Share as of December 31, 2023(1) FOURTH QUARTER 2023 FULL YEAR 2023 GAAP NET INCOME (LOSS) $(88) Million* $533 Million* $(0.18) per Diluted Share(2) $1.10 per Diluted Share(4) EARNINGS AVAILABLE FOR DISTRIBUTION(3) $247 Million $
Slide 5: A New Chapter Meets Changing Market Dynamics
A New Chapter Meets Changing Market Dynamics Actions taken as a result of changing market conditions showcase our ability to act nimbly Market Dynamic Rithm Action Taken • Acquired $1.4bn of consumer loans from the broader Marcus portfolio owned by Goldman Sachs Retreating Banks • Acquired portfolio
Slide 6: Diversifying Our Platform: Sculptor
Diversifying Our Platform: Sculptor Our platform is well positioned to capitalize on growing opportunity set ~$33 Billion(1) ASSETS UNDER MANAGEMENT Private Asset & Credit Solutions Market Solutions Credit Real Estate Multi-Strategy Corporate Credit Opportunistic Equity Corporate Credit Structured C
Slide 7: Sculptor: Strong 2023 Investment Performance
Sculptor: Strong 2023 Investment Performance 2023 built upon Sculptor’s 29-year history of outperformance versus benchmark returns across market cycles(1) Representative Sculptor Investment Performance (Gross | Net)(2) 2023 Performance Since Inception Credit Sculptor Tactical Credit Fund 22.9% | 17.
Slide 8: The Rithm Approach: Opportunity, Innovation & Partnership
The Rithm Approach: Opportunity, Innovation & Partnership The Rithm ethos is informed by three core principles which together underpin our business model OPPORTUNITY INNOVATION PARTNERSHIP We expect growing Leverage our long Track record in private capital needs history in pioneering successfully in
Slide 9: Newrez: Industry Leading ROE of 19%
Newrez: Industry Leading ROE of 19%(1)* Our differentiated platform is positioned for continued success in 2024(2) Q4’23 and FY’23 Results • Strong servicing business continues to generate Segment ($mm) Q4’23 FY’23 significant profits and cash flow Servicing excluding MTM $210.6 $835.1 • Origination
Slide 10: Newrez Servicing Platform is Positioned for Further Growth
Newrez Servicing Platform is Positioned for Further Growth Continuing to execute on strategy through acquisitions and organic growth Positioning and Strategy • Fourth largest non-bank servicer(1) • Anticipated close of SLS in Q1’24(2) • Market-leading special servicer • Entry into agency and Ginnie
Slide 11: Newrez's Balanced Origination Platform
Newrez’s Balanced Origination Platform Diversified approach maximizes customer growth and retention Retail Correspondent Wholesale Consumer Direct Joint Venture Local Presence, Personal Cost-Effective Customer & Alternative Cross-Sell and Recapture of Strategic Service MSR Acquisition Product Offeri
Slide 12: AI Will Revolutionize the Mortgage Industry
AI Will Revolutionize the Mortgage Industry Newrez proprietary technology and AI allow for streamlined operations and provide operating leverage(1) People to focus on value-added activities; AI does the rest. Empowering People “Rezi” AI pilot launched Q4’23 4.6mm loans serviced to date – data to imp
Slide 13: Generating High Yielding Quality Assets in Construction Lending
Generating High Yielding Quality Assets in Construction Lending Genesis Capital is a captive lender focused on originating high-quality loans to strong sponsors while maintaining robust credit standards Business Highlights Credit Overview • Strong structural tailwinds • Floating-rate nature of Genes
Slide 14: Adoor Single-Family Rental Advantage
Adoor Single-Family Rental Advantage With housing supply strained and affordability at a multi-decade low, there is a heightened need for rental housing in the U.S. ✓ Portfolio is seasoned and cash flowing, with 94% High Quality, Cash Flowing Portfolio stabilized occupancy(1) ✓ High-quality portfoli
Slide 15: Q4'23 Segment Performance
Q4’23 Segment Performance Q4 2023 Quarterly Supplement
Slide 16: Newrez Servicing Business Highlights
Newrez Servicing Business Highlights Robust servicing platform continues to benefit from scale efficiencies and technological investments • Delinquencies on owned servicing remains low and stable at 2.1% (0.1% reduction YoY) • Leading special servicer workout ratios; $290m+ in Homeowner Assistance F
Slide 17: Newrez Originations Business Profitable in FY 2023
Newrez Originations Business Profitable in FY 2023 Implementing strategies to take advantage of current environment • Acquisition of SLS expected to add co-issue MSR acquisition capabilities(1) • Investments in cross-functional recapture efforts through new partnerships • Right-sized retail channel
Slide 18: MSR Portfolio Summary
MSR Portfolio Summary Rithm has significant investments in MSRs with beneficial earnings power in an elevated interest rate environment MSR Portfolio Activity & Outlook Rithm Strategic Advantage • MSR portfolio totaled $590 billion UPB as of December 31, 2023(1) Attractive Return ✓ Source of steady
Slide 19: MSR Portfolio Values
MSR Portfolio Values 99% of our Full MSR portfolio is out of the money to refinance with a portfolio WAC of ~3.9%, significantly below current new production(1) Full MSR Price & Multiples $400 Full MSR Portfolio Speeds & Amortization 30% $350 During Q4’23, speeds slowed due to seasonality and, with
Slide 20: Commercial Real Estate
Commercial Real Estate Rithm continues to utilize its extensive network and experience investing in complex and distressed real estate opportunities(1) ✓ Management team has 20+ year history investing in and operating commercial real estate at various institutions ✓ Focused on providing structured c
Slide 21: Single-Family Rental
Single-Family Rental Adoor is well positioned to benefit from the current market environment, acquiring SFR properties at elevated cap rates through its acquisition channels and maintaining active property management(1) Q4’23 Activity & Key Metrics • Announced the formation of Adoor Property Managem
Slide 22: Consumer Loans
Consumer Loans Rithm continues to opportunistically invest in consumer loan portfolios, providing differentiated and risk-adjusted attractive returns Marcus Prosper SpringCastle • In June 2023, Rithm invested $145 • In February 2017, Rithm became part • In April 2013, Rithm invested $241 million to
Slide 23: Appendix
Appendix Q4 2023 Quarterly Supplement
Slide 24: Condensed Consolidated Balance Sheets
Condensed Consolidated Balance Sheets (dollars in thousands, except per share data) As of 12/31/23 As of 9/30/23 (Unaudited) (Unaudited) ASSETS Mortgage servicing rights and mortgage servicing rights financing receivables, at fair value $ 8,405,938 $ 8,694,868 Real estate and other securities ($9,75
Slide 25: Book Value per Share Summary
Book Value per Share Summary Per Share Ending Q3’23 Book Value Per Share $12.32 Net Income (Loss) (Net of Tax and Change in Fair Value) 0.79 MSR Realization of Cash Flows (0.28) Change in Valuation Inputs and Assumptions (0.69) GAAP Net Loss (0.18) Other Comprehensive Income 0.01 Common Dividend (0.
Slide 26: Consolidated Statements of Operations
Consolidated Statements of Operations Three Months Ended Twelve Months Ended December 31, September 30, December 31, December 31, Unaudited (dollars in thousands) 2023 2023 2023 2022 Revenues Origination and Servicing, Investment Portfolio, Mortgage Loans Receivable and Corporate Servicing fee reven
Slide 27: Segment Information (Q4'23)
Segment Information (Q4’23) (dollars in thousands) Mortgage Origination and Investment Loans Asset Quarter Ended December 31, 2023 Servicing Portfolio Receivable Management Corporate Total Servicing fee revenue, net and interest income from MSRs and MSR financing receivables $ 406,654 $ 75,556 $ — $
Slide 28: Segment Information (Q3'23)
Segment Information (Q3’23) (dollars in thousands) Mortgage Origination and Investment Loans Asset Quarter Ended September 30, 2023 Servicing Portfolio Receivable Management Corporate Total Servicing fee revenue, net and interest income from MSRs and MSR financing receivables $ 372,979 $ 69,665 $ —
Slide 29: Mortgage Servicing Rights
Mortgage Servicing Rights (dollars in thousands) MSRs Balance as of September 30, 2023 $ 8,694,868 Purchases, net 221 Originations 177,195 Change in fair value due to: Realization of cash flows (134,884) Change in valuation inputs and assumptions (331,462) Balance as of December 31, 2023 $ 8,405,938
Slide 30: Origination and Servicing
Origination and Servicing Q4’22 Q1’23 Q2’23 Q3’23 Q4’23 Servicing Servicing Portfolio (UPB $bn) In-House Servicing $401.9 $401.4 $401.6 $455.2 $457.0 On Behalf of Third-Parties $93.0 $94.1 $95.6 $99.4 $102.5 Whole Loan & Other $8.6 $8.6 $8.8 $8.5 $8.5 Total UPB $503.6 $504.0 $506.0 $563.1 $568.0 Ori
Slide 31: 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. ($000s, except per share da
Slide 32: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures • The Company has four primary variables that impact its performance: (i) Net interest margin on assets held within the investment portfolio, (ii) realized and unrealized gains or losses on assets held within the investment portfolio and operating compan
Slide 33: Endnotes
Endnotes Q4 2023 Quarterly Supplement
Slide 34: Endnotes
Endnotes Endnotes to Slide 3: Source: Company filings and data. Financial data as of December 31, 2023 unless otherwise noted. 1) Total Dividends includes the common dividend for the fourth quarter ended December 31, 2023, which was paid on January 26, 2024. 2) 2023 Total Shareholder Return is based
Slide 35: Endnotes (Cont.)
Endnotes (Cont.) Endnotes to Slide 7: 1) Source: Sculptor 3Q23 Earnings Press Release. 2) Past performance is not indicative of future results. 3) The return information reflected in these tables represents, where applicable, the composite performance of all feeder funds that comprise each of the fu
Slide 36: Endnotes (Cont.)
Endnotes (Cont.) Endnotes to Slide 8: 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. Endnotes to Slide 9: Source: Company filings and data. Finan
Slide 37: Endnotes (Cont.)
Endnotes (Cont.) Endnotes to Slide 14: Source: Company filings and data. Financial data as of December 31, 2023 unless otherwise noted. 1) “Stabilized Occupancy” means percentage of properties (by count) that are occupied at the end of the period divided by the total number of properties in the port
Slide 38: Endnotes (Cont.)
Endnotes (Cont.) Endnotes to Slide 22: 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) We calculate the estimated return/yield, or the IRR, of
Slide 39: Abbreviations
Abbreviations Abbreviations: This Presentation may include abbreviations, which have the • Recapture Rate – Percentage of voluntarily prepaid loans that are refinanced by following meanings: the servicer • 60+ DQ – Percentage of loans that are delinquent by 60 days or more • Refi - Refinance • AI –
Slide 40: Q4 2023 Quarterly Supplement
Q4 2023 Quarterly Supplement