Michael Nierenberg: So there’s — I think there’s a ton of opportunities. I mean office is obviously for sale, for example. We’ve looked at a number of different opportunities in office because most folks are shying away from that. When we look at the real estate market today, what I would say is we equate it to some of the best investing environments we’ve seen in — quite frankly, in our careers. And this takes us back to — I’m not sure everybody on this call is born, but the early ’90s, which were the RTC days when the government was liquidating all these thrifts, those were great opportunities to deploy capital. You look at the great financial crisis. You look at the dotcom crisis, you look at where we are today with rates.
And as a result of COVID and people not being in the office, there’s great, great opportunities. As the banks write some of their assets down, I think what you’re going to find over time is once they write them down, they would look to part with them off their balance sheet as long as they’re not strategic. We’ve done some investing in the office space recently around the debt side where we’ve looked at, for example, a deal that was originated a few years back with a, I think, a total market cap of about $2.4 billion. And we just — we acquired a pool of debt with the first dollar of loss at roughly $900 million. So if you think about that $2.4 billion to $900 million, stuff down significantly. And as long as you think you have the expertise to underwrite it, we’re going to deploy capital there.
The real estate guys on the Sculptor side, they’re out, doing their thing around both equity and debt. And again, the story is the same. We’re in one of the better real estate investing environments that we’ve seen in our careers. There is a need for funding because whether it be some of the traditional real estate players who have a fair amount of legacy commercial real estate are going to be less aggressive in certain areas or when you look at the banks who are going to be less aggressive, I think, it puts us in a great place between both Rithm and Sculptor to take advantage of these opportunities.
Jay McCanless: So if you could take that a step further and when you’re thinking about acquisitions and the alternative asset space, what makes sense? What are you guys taking an eye at or taking a look at right now?
Michael Nierenberg: Anything that can be synergistic with our existing business that we think. We have the pieces in place to win at both the Sculptor and Rithm level. We don’t need anything else. I think part of this is as we think about real earnings for shareholders. When you look at the way we trade, quite frankly, I think that we trade poorly from an equity perspective. If we could change the narrative where we trade more like an alternative asset manager and you pick up several multiples versus EBITDA, I think we’re going to be, I think the opportunity for us and our shareholders and LPs is a great one. So that’s how we’re thinking about it. But the scope of the real estate guys are world class, the credit guys are world class, the master fund and Jimmy and that team, I mean we have all the pieces in place.
At the Rithm level, I’m saying Charles is here with me. I think we all punch above our weight. We have a world class team, and we don’t really need anything else. It’s just more what can be accretive for our equity holders in the business.
Jay McCanless: Okay. Thank you, Michael. And one more if I may. If rates do stay high this year, are there acquisition opportunities you think to build out the Genesis platform? Anything you’re seeing that looks interesting there?
Michael Nierenberg: Yeah. I think scale wins in those business lines. I mentioned earlier, this year should be, give or take, $2.5 billion or so in our origination business. I do think there are — there will be platforms and/or people, honestly, we don’t need a — you don’t need a lending platform if you have the platform, if you could acquire teams of people which I know we’re currently looking at — looking to do right now.
Jay McCanless: Okay. Sounds great. Thank you.
Michael Nierenberg: Thank you.
Operator: The next question comes from Giuliano Bologna with Compass Point. Please go ahead.
Giuliano Bologna: Good morning. Congrats on the good results this quarter. One thing I’m curious about asking is, this might be hopefully not too convoluted. I’m curious if there’s been progress on raising MSR funds? And I think we all know that there’s a large opportunity for both deals out there. And I’m curious how you think about the growth of the mortgage company and the MSRs? I realize the SLS is still there and hopefully closing soon. But I’m curious how you think about allocating those to your balance sheet versus potential fund vehicles at this point?
Michael Nierenberg: There’s constant dialogue between what I would call the asset management business under Sculptor and at the Rithm level as we think about the balance sheet and balance sheet investing. I brought up the SFR funds for example, that we’re likely going to grow that business away from the public company. I think there was an article about a large — one of the larger asset managers raising money $1 billion fund around the build-to-rent space. We intend to do something similar there. On the MSR side, we will — we continue to evaluate MSR funds candidly. I mean, when you look at where you create these, they’re created anywhere from an 8% to 10% unlevered type of yield. So you got to make sure that resonates with folks.
There are — you need to have the operating business and have a great recapture/origination business in our mind to make this work. We’ve had these discussions with a number of folks. I’ve been overseas four times in the past year. So we’ve had a ton of these discussions and we’ll continue to do so. But it has to work within our business. The last thing I’ll point out, when you look at the Sculptor business, we have credit funds. The credit funds have restructured products in them. Some of the best results there are when they take advantage of, for example, the March 2020 period during COVID, when assets were essentially a giveaway and the team counts on those and created great results. So we don’t necessarily need a dedicated fund per se when we have the credit funds and we have the real estate funds at the Sculptor level or the multi-strat fund.
Giuliano Bologna: No. That’s very helpful. And then obviously, it won’t be an overnight process, but coming to more of an alternative asset manager model, it take some time. I’m curious, you’ve talked about the potential for doing something or talk about confidentiality following S1 for the mortgage company in the past. Obviously, the SLS deal probably pushes that back a little bit in terms of timing to get that done. You’ve talked about moving the SFR business into fund vehicles. I’m curious when you think about the pivot of moving some of the balance sheet assets to kind of third-party or asset management and moving some to AUM to asset management for the Rithm level, how long do you think that will take or what the milestones could be over the next few years?
Michael Nierenberg: If we could do it in two weeks, we would do it in two weeks. It’s going to take some time. We can — listen, do we need the biggest balance sheet? The answer is no. Does the balance sheet help? The answer is yes. We look at strategic things that we could do together. No different than I think the large — the larger players in the old space. When we look at things that we could do together with the Sculptor folks, there are things we will do together at those levels. It’s going to take — it will take some time. Ideally, you’d want to do more in the so-called the fund business. The other thing I — just to point out, one of the beautiful things about our business is we do have $7 billion of permitting capital from an equity perspective.
And I think that’s highly valuable. So as we look going forward, if we could create more vehicles that are going to give us what I would call permanent equity from a permanent capital standpoint, we’ll continue to look at that as well. But transferring or not transferring, just creating more assets off balance sheet, I think, is going to help from a valuation standpoint as well.
Giuliano Bologna: That’s very helpful. I appreciate it and I’ll jump back in the queue.
Michael Nierenberg: Thank you.
Operator: The next question comes from Jason Stewart with Jones Trading. Please go ahead.
Jason Weaver: Hey, good morning, guys. Thanks for taking my question. And this is Jason Weaver, by the way. I was wondering, Michael, can you elaborate a bit on how you see the integration going for SLS within the larger Newrez ecosystem once you close in March? What’s the expected duration of that and the time to achieve the synergies you mentioned in an earlier question?
Michael Nierenberg: We signed the deal. Things are happening as we speak now. We’re going to try to concentrate geography more so than to have geography across every state here in the US but things continue and we expect that integration to be pretty seamless because it’s a servicing business for the most part. When you look at our servicing sites, we have Greenville, South Carolina. We got Fort Washington in PA, we got Tempe, Arizona and then we have a couple of sites in Texas. Those are our main sites. I think you could assume that it’s going to continue that way. But acquiring a servicing asset and putting under servicing platform is a lot different from going out and acquiring full-scale operating businesses.
Jason Weaver: All right. Thank you for that. And just as a follow-up on the origination side of things, I was wondering if you have any update on possible new developments for new joint venture partnerships there?
Baron Silverstein: We evaluate them just like Michael talked about from different strategic transactions with the origination business, obviously being pretty slow. Most of our partnerships are on the realtor side, which is obviously a pretty slow business as well. I will tell you that we’re more focused on, I would say, fintech relationships or other relationships that might be accretive for our entire business overall. So it’s something that we constantly look at even on any type of acquisition, say if someone is trying to sell a platform and then we can utilize the JV — joint venture kind of structure as an alternative.
