So the returns are good. I think returns are going to bring in more capital, and that’s going to be from both existing LPs and hopefully, from a bunch of new LPs. There’s a lot of marketing that continues to go on around the platform. So it’s — money is going to flow. It’s going to take a little bit of time here. But performance is going to bring in new pools of capital, for sure.
Doug Harter: And I guess just on Sculptor, can you just talk about how retention has gone since the deal closed relative to your expectations?
Michael Nierenberg: Great. We’ve lost a couple of bodies, but that’s to be expected in any kind of acquisition. We’ve added new talent. There’s a lot of, what I would call, incoming resumes that want to join the platform, whether it be at the Sculptor to level and/or at the Rithm level, people are excited where we are and what we’re doing. So I don’t — there’s no lack of anything. The investment team is solid and the results are solid as well. So no issues whatsoever on the retention side.
Doug Harter: Great. Thank you.
Michael Nierenberg: Thank you.
Operator: The next question comes from Stephen Laws of Raymond James. Please go ahead.
Stephen Laws: Hi, good morning. Michael, I guess to start, can you talk about with mortgage rates moving back towards highs, what you’re seeing in the pipeline there, sensitivity of borrowers to rates moving where they are? And kind of outlook for volumes near term and how you see that progressing through the year?
Michael Nierenberg: Barron, do you want to hit mortgage rates, higher that…
Baron Silverstein: I mean the market remains predominantly a purchase market, right? So for us, it’s about delivering excellent service to our customers and then making sure they understand who we are as a company and what we can otherwise deliver either through products or quality service. And we think we have a lot of upside in our customer retention from an origination perspective. And as I mentioned in our talking points, we’ll remain opportunistic through all of our different channels for either ongoing growth. And we’re not going to basically look at the market and Michael’s used this term pike the Fed, but the market interest rates being higher, we’re going to remain nimble and very, very cost efficient in our origination business and cost efficient on our servicing business and that way we can perform in every market.
Stephen Laws: Great. And then I think as a little bit. Can you touch on the announcement with great Ajax and what you envision there and how you think about fees benefiting Rithm with that relationship?
Michael Nierenberg: Yes. Great question. As we look at — Great Ajax, it’s a platform that’s going to be externally managed, assuming that shareholder vote is affirmative for us. And the idea there is to grow that into a commercial — publicly traded commercial real estate REIT that has no legacy commercial real estate exposure with the management fees that will flow into NewCo, which will be a management company. So I think that is the start when you think about Sculptor and fees that are going to be generated over the years, that will flow into a management company. You think about — Great Ajax, some of the other things that we have on our plate today, that’s really the goal. But it’s really going to be a clean platform probably something between, call it, $250 million of equity that we’ll be investing in commercial real estate with the team’s type mandate, and it will be a clean platform relative to the — some of the other folks.
A lot of work to on that one, but that’s the intention.
Stephen Laws: Great. Appreciate both your comments this morning.
Michael Nierenberg: Thank you.
Operator: [Operator Instructions] And our next question will come from Jason Weaver of Jones Trading. Please go ahead.
Jason Weaver: Hey, good morning. Michael, you mentioned in your prepared remarks, you were anticipating it, but can you talk about what you’re seeing about incremental returns on the MSRs out there right now? As well as if you’re looking at anything closer to the current production coupon?
Michael Nierenberg: So here’s how we evaluate the MSR business. We don’t — as I pointed out, we’ve been doing this a long time. We see a lot of bulk packages. A lot of them are small when I say bulk, there was a couple of large from wells that went back over the course of the past year. When we look at where we could produce an asset versus where we could buy an asset, if we think we could produce the asset at a cheaper level. We’re obviously always going to do that because you’re creating — we should be creating enterprise value around our mortgage company versus just going out and buying an asset. So our whole theme is as we create more enterprise value that goes to Sculptor, that goes to the mortgage company and other things that we’re going to do around some of our other subs or business lines.
As we evaluate whether it be lower coupon MSRs or it’s all just a total return for us. If we could buy an MSR at an unlevered 10 and with a little bit of leverage, it’s a 12 versus buying a distressed commercial real estate asset out of 15. Obviously, we’re going to offer the thing at 15. But everything is when we look at where we are today and the capabilities we have between credit and real estate and origination, we have it all, we don’t have insurance. But everything is going to be total return-oriented how we think about investing in MSRs or some other asset class. We generically obviously, organically, I should say, manufacture MSRs with every loan that we create. And then we’ll just evaluate that versus where we can buy that in the secondary market.
Yes. Just keep in mind, MSR values, overall, weighted average mark, give or take 5 for the industry right now, if rates did sell off another 50 or 100 basis points, at some point, that duration becomes capped or you get longer. So it’s just something to think about in that asset class.
Stephen Laws: Understood. And then on the Genesis business, I was wondering if you could provide a little bit more context around the greater sponsor demand you noted. Given a little relief on the rate front thus far this year, is this really just a function of banks really getting out of that business?
