Rithm Capital Corp. (NYSE:RITM) Q4 2024 Earnings Call Transcript

Rithm Capital Corp. (NYSE:RITM) Q4 2024 Earnings Call Transcript February 6, 2025

Rithm Capital Corp. beats earnings expectations. Reported EPS is $0.6, expectations were $0.44.

Emma Bolla: Thank you, and good morning, everyone. I would like to thank you for joining us today for Rithm Capital’s fourth quarter and full year 2024 earnings call. Joining me today are Michael Nierenberg, Chairman, CEO of Rithm Capital, Nick Santoro, Chief Financial Officer of Rithm Capital, and Baron Silverstein, President of NewRez. Throughout the call, we are going to reference the earnings supplement that posted this morning to the Rithm Capital website, www.rithmcap.com. If you have not already done so, I encourage you to download the presentation now. 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.

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. 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.

Michael Nierenberg: Thanks, Emma. Good morning, everyone. I want to welcome you to our fourth quarter and full year call for Rithm. The company had a great fourth quarter and a great year. What I thought I would do today, which is a little bit different than our typical earnings call, I figured I would take a step back and talk about the Rithm story for a minute. When you look at Rithm, you may ask who are we? We began the company in 2013 while at Fortress to acquire MSRs from banks as Basel III capital rules made them too costly. The company, which started with $1 billion of capital, today has grown to $7.8 billion of permanent capital. Along the way, we grew our asset management business, began building and acquiring operating companies.

In 2022, the board acquired the management contract of New Residential from Fortress. And then we began the next leg of our journey, which was to continue building a world-class asset management means for our thought was to go out and raise third-party capital. So if you think about it, while at Fortress all the capital and all the growth of the company was done in the public markets, so to not confuse that story, we built it in the public markets. As we looked at the next leg of our lives, we said, let’s go raise private capital. So in August of 2022, we changed our name to Rithm Capital. While we still operate as a REIT, we continue to evaluate the benefits of changing our capital structure. There are still some things to do in order for us to get there.

Today, when I look at the firm and we look at the firm, we have what I believe is a complete product offering for shareholders and LPs in all asset classes, ranging from real estate to credit, including the new hotword in the private capital sector of ABF, which is asset-based finance, something that we have been doing our whole careers. Another exciting thing is we expect to announce soon, probably in the next 30 days, a global energy infrastructure platform with scale capital partners, which will be supplying power to data centers across the world. When I think about our business, I like to think about why us. One, results. Must have performance to grow our business. Two, we are very different than other asset managers. We have the ability to manufacture assets through our operating businesses.

We underwrite, originate, and service the assets from beginning to end. Servicing matters. We have been in a very benign credit cycle for many, many years, and at some point, that will turn, and having the third-largest mortgage company or servicer here in the United States is going to make a big difference for our business. Our asset management business. Many of you know we acquired Sculptor in November of 2023. We have been together for one year, and the business is doing great. The results are great. And we look forward to future growth there as well. So our value prop is the following. Results first again, when you look at the family of all of our companies, on the investment side between Rithm, Sculptor, some of our other investment areas, we have over 400 individuals.

Our operating business lines have approximately 7,000 people. Number two, when I look at our equity, when looking at the sum of the parts, we are severely undervalued. And I know as we continue to trade as a REIT, like others that trade a REIT, either trade a book, a slightly above book, or below book. I think that the sector is extremely undervalued relative to when you see other asset managers trading at 30 times DE. Our manufacturing engine for assets differentiates us from others. One of our LPs would like. Can differentiate our product offerings. We can create whatever product offering. So I will now refer to our supplement, which has been posted online. I am going to start with page three. I will go through most of the slides. Baron will hit the mortgage company.

And then we will go to Q&A. So when you look at the company today, between Rithm and Sculptor, assets really being managed, Rithm has a $45 billion balance sheet. Sculptor has about $35 billion of AUM. The combined entity is about $80 billion of AUM. $7.8 billion of permanent capital, and the company makes, you know, a little north of a billion dollars a year. When you look at growth, 76% earnings growth since the first quarter of 2021. The right side of the page, you can have a look. NewRez, our mortgage company, obviously, scoped to the asset management business in the private markets. Genesis Capital, one of the largest non-bank construction/RTL lenders in the business. Last year in June, we took over the management contract of something called Great Ajax.

It was kind of a broken REIT. We renamed it Rithm Property Trust with the intent of growing that into, quite frankly, like a Rithm, like what others have done in the public markets around externally managed vehicles. And then we have a small SFR business in a door. Financial highlights page four. Year-over-year growth in earnings 27%, earnings available for distribution $2.10. As I look at Q4, GAAP net income $263 million or $0.50 per diluted share, return in equity 16%. Earnings available for distribution, $316 million or $0.60 per diluted share. Return on equity, when you look at our dividend, it is still 9.2%. And we still paid $0.25 per common share. Book value ended the year at $12.56, which I think is pretty much unchanged versus the prior year.

And today, our book value is in and around the same. For fiscal year 2024, full-year GAAP net income $835 million or $1.67 per diluted share, 14% return on equity, includes marks and other things. Earnings available for distribution, $1.05 billion, $2.10 per diluted share, and a 17% return in equity. And then again, the dividend yield of 9.2%, we pay a dollar a year. Page five, year-end review. Genesis Capital. Acquired this company from Goldman’s merchant bank in, I believe, it was December of 2021. At that time, they were doing about $2 billion in origination. This year, we did $3.6 billion. We acquired the company, the EBITDA number was about $40 million. Today, it is doing about in and around $100 million of EBITDA. So it has been a great success story.

Obviously, with banks and regional banks pulling back in certain areas, this company is poised for success, and it is also poised for a lot of growth. The asset management side, as I pointed out, we are one year in, with Sculptor, that is our asset management arm. Returns have been super. I mean, if you look at the Multistrat Fund, last year, 18% gross or 13.5% net. And if you look at some of the other businesses around the real estate side, and I will get into that when we look at some of the sculpture slides, this great performance and it echoes my opening remarks that the only thing we care about is performance first. Performance first is going to lead to more AUM growth. It is not the other way around for us. When I look at the investment portfolio, we did seven securitizations in 2024, a little under $3 billion.

We invested $1.8 billion in residential mortgage assets. One of the interesting deals we did, and this is very popular with a lot of LPs, we invested $200 million of equity in a large SRT transaction with a large bank where effectively we took a slice of a mortgage warehouse. Why us? Because we have the operational capacity in the event that there was something that went awry with one of their underwriting mortgage bankers. And then NewRez, again, very proud of this company, proud of the team. Baron has done a great job as has his leadership team. Top three US mortgage servicer, in total top five US mortgage originator in total. And keep in mind, when we were at Fortress, we built Mr. Cooper, which was formerly known as Nationstar. We started this company from scratch in 2018.

So very, very proud of the team and the results that we have there. And that company is just poised to grow, and I think a lot of it, and Baron will talk to that a little bit. I look at our foundation for growth, we are going to continue to try to grow our third-party asset management business. We want to shrink our balance sheet. We want to do things more, again, off balance sheet. If you look to the right side of the page here, Rithm Property Trust I pointed out, that was an opportunistic situation. Effectively, we just took over the management contract. The team has done a great job on that. We took it over in June. It was losing money. Actually got it to at the end of Q4 where the company is flat to now making money, and that should continue to grow.

Just for Rithm shareholders, that is an external managed vehicle. So management fees, as we grow, that will feed to the bottom line. Asset-based finance, the hot topic, everywhere, every asset manager everywhere is talking about that. So-called $30 trillion opportunity. We have been doing this our whole life. Energy transition, I pointed out, going to be partnering and launching a global energy infrastructure fund. What is going to happen there is we are going to partner with a couple of our old Fortress colleagues bringing third-party capital. There is a huge shortage, obviously, of power. We are not going to get in on the Q&A. We do not need to get into the deep seek stuff, but I would say is world-class team. We will not enter a vertical unless we have the expertise.

And we are super pumped for that because the need for power around the globe is massive. And the amount of capital needed to fund all this power, whether you are building power plants, or you are funding some of these, you know, these hyperscalers, is going to be immense, so we are really excited about that. So that is page six. Some of the parts I am not going to spend a ton of time here. Bottom line is I think our equity is extremely cheap. I look at asset managers where they trade. Know, if you think about it, we make a billion dollars. We trade at six and change times. We have asset management. We have operating businesses. The company is extremely undervalued. I think at some point, and I thought about this coming into the beginning of the year, the market should be looking at some of the recent and the real earnings potential around not only us, but just others and what people are doing in that sector.

If you think about, you know, something at 30 times or something that is steady billion dollars at six times, I know where I would think about it. Capital deployment on page six. This just shows going back to 2021, how we have grown our earnings. You know, we have grown it strategically. We have focused on sectors that we believe are going to generate mid-teens or teens returns. So when you have a look, earnings growth is again up 76% since 2021. And our EAD from a CAGR standpoint is up 16%. So again, very proud of that. Just a couple points here on Genesis. I mentioned before bought the company in 2021, another great team. The team here at Rithm works very closely with them. I expect this business to be sensitive to credit, obviously, because as I pointed out in my opening remarks, we have been in a very benign environment for many years.

While saying that, you know, there is $3.6 billion with $100 million of EBITDA. I expect that to continue to grow. The asset class itself is very much in vogue. It is a mid-teens type return. And we are seeing a lot of demand from LPs for that type of product. A lot of different sponsors, and I think the upside there when you look at, you know, unfortunately, some of the disasters happening, whether it be on the West Coast and other places, we are poised to make loans in those areas. I am going to flip to the sculpture slide. So page thirteen. Obviously, when we bought Sculpture in closed in November, I think it was the nineteenth of November in 2023. So it is really one full year in. Returns have been great. Fundraising is going extremely well.

When I look at or we all collectively look at the teams, world-class world-class real estate business, world-class Multistrat business, credit we are going to look to continue to try to grow that business over time. We restarted the CLO platform last year. And we have also accelerated some growth in a sculptor non-trader grade. The other thing what I would say around Rithm and Sculptor, Rithm is a true partner to Sculptor. So when we look at things that Sculptor can do, whether it be launching a fund or something, it is very likely that the support from Rithm will enable us to participate not only in that fund but help grow those funds over time. Page fourteen, just the performance. Again, if you look at Sculpture tactical credit fund, for example, 25% gross, you know, almost 20% net.

Fantastic. You look at the, you know, the realist the Multistrada, I pointed out earlier, 18% gross, 13.5% net. And then when you look at the real estate business, again, these guys are guys and gals are world-class business. Second to none. When they go out with funds, I think we would expect those to be oversubscribed. Finally, I will talk to Rithm Property Trust, and I will turn it over to Baron. Again, this is the so-called broken REIT. We took over in June. Right now, it has got about $250 million of equity in it. There is a management fee and a promote. So as we continue to grow that, take advantage of dislocations in the commercial real estate market, it is our expectations that this vehicle could grow into a multibillion-dollar vehicle.

With that, I am going to turn it over to Baron who will talk about Nuance.

Baron Silverstein: And good morning to everybody. So I am turning to slide twenty. And NewRez delivered another strong quarter. With fourth quarter pretax income excluding mark to market of approximately $280 million, which is an increase of 12% quarter over quarter and delivering a 20% ROE. We also finished the full year of 2024 with approximately $1 billion in pretax income. And that is up 26% year over year with a 19% ROE. These results though reflect the change in segment reporting, by including MSRs that were previously reported as serviced by others and the MSR hedge, that were reported in the investment portfolio segment. And we believe this change more accurately reflects the economics of Rithm’s origination and servicing segment, which is NewRez overall and more closely resembles industry norms across our sector.

And overall, we continue to gain momentum these results show the power of our platform. We have $844 billion in total servicing, now the number three servicer, and $59 billion in funded volume for 2024. With the number five originator. Turning to slide twenty-one, you can also see that we remain in growth mode. The last few years really present the effectiveness of our well-balanced platform. By taking advantage of origination opportunities and servicing opportunities regardless of market conditions. Our 2025 strategy is no different. We do not chase market share nor that we have a hope that rates will come down. Remain focused on growing our brand presence and delivering best-in-class customer experience in order to maximize customer retention and recapture.

Growing our B2B platforms is also focused on building new partnerships, increasing wallet share, with our existing customer base and also being opportunistic on MSR and platform acquisitions. These initiatives coupled with our operational excellence and improved efficiency through our AI initiatives and our technology continue to support our financial performance. Turning and moving to slide twenty-two. Our origination business also continues to perform well. We funded approximately $17 billion in the fourth quarter, which is up 9% quarter over quarter. And $96 million in originations PTI, up 19% from last quarter. This quarter is our best performance financial performance since 2021. On margins, and while the market always remains competitive, we are able to improve our average margins to 131 basis points, up 8 basis points overall quarter over quarter, while maintaining market share.

And while all of our channels were profitable in 2024, our multichannel strategy allows us to optimize on opportunities in all market opportunities. And this is shown by $270 million of origination PPI. For the full year, which is up 1200% year over year. And as I mentioned before, you know, one of our top priorities in our biggest opportunities, our ability to retain our customers, which takes us to slide twenty-three. Right? Our portfolio now sits at 3.7 million customers. And the scale affords significant opportunities for portfolio recapture, customer growth. Through future cross-sell strategies. Our ability to grow our origination business is focused on being able to deliver recap even without a rate rally. And that includes cash-out refis, home equity loans, purchase transactions, to our existing customer base.

By delivering our brand and making investments in building digital tools to enhance our customer experience is key to our success. Moving to slide twenty-four, our servicing business also continues to perform well. Our total managed servicing portfolio was $844 billion, which is comprised of $525 billion of owned MSRs, directly serviced by NewRez, $65 billion of owned MSRs serviced by others, and $254 billion of third-party servicing. As I mentioned before, the financials related to service by others portfolio is now reported in the NewRez or the originations and servicing. But an important to note that we, NewRez, have always been actively managing these SDO MSRs and the performance of these third-party servicers to ensure alignment to our standards.

Our third-party servicing franchise also had a great quarter. We added $21 billion in net notional UPB, which is up 9% quarter over quarter, continuing to gain wallet share with our existing customer base and also adding new. Right? But our performance is always driven and continues to be driven by our operational efficiency, you know, through our proprietary technology, our scale and cost leadership, and that is seen in our ability to transfer 1.2 million loans in 2024. On slide twenty-five, you see our owned MSR performance which not surprisingly is reflective of market conditions with higher interest rates and low prepayment speeds and I am not going to spend a lot of time on that. Moving to slide twenty-six, right. On our market-leading special servicing franchise is really our presentation on our core capability of our overall platform.

It is an important business for us as it is both fee-based capital light and provides significant operating leverage to our platform. While delinquencies remain low from a historical context and Michael talked about that, you can see in the chart on the bottom left that delinquencies are slowly on the rise. And we help homeowners find a solution to stay in their home. This is proven not only with our third-party clients continue to grow with us but also through our performance shown on the right side of the slide as well as supporting homeowners in times of need like the recent hurricanes in Los Angeles fires. I continue to believe our business is as best positioned as it ever has been and I am looking forward to continuing to tell the NewRez growth story in 2025.

Back to you, Mike.

Michael Nierenberg: Thanks. Operator, if we could just turn in, open up the lines for Q&A, that would be great.

Q&A Session

Operator: If at any time your question has been addressed, the first question comes from Bose George. Please go ahead.

Bose George: Could you give us any updated thoughts on the potential listing of NewRez in 2025? And then could you also just tie that into your comments, Michael, in your prepared remarks about potential changes in the capital structure at Rithm?

Michael Nierenberg: Sure. So I, you know, we are not there yet on listing the company. We are, you know, if you had talked to Nick and the team, we have taken steps to have separate segment reporting where everything is now listed at the mortgage company. So you have a clear view into how that company is doing. I think the big part for us is how do we think about shareholders and not just at the mortgage company level quite frankly, and get the proper multiple for how we know, how we see ourselves in the business. That is one of the reasons why I opened up a little different than I typically do. There are some pieces that need to come into play. One is we need to, if we were going to do that, we want to grow our REIT, you would have a dedicated REIT, you would have a C corp up top, no different than some of the, you know, the best in class asset managers and then we would have our operating companies below.

So that is really the path we are on. I will say the M&A pipeline of stuff that we are looking at is extremely robust. Whether that be on the asset management side, and just some of the other things that, you know, manufacturing businesses as I refer to them in our opening remarks. But to tell you today that we are going to list the company, I cannot do that. But we are working on our capital structure, and we hope to have some change in that. You know, we put a lot of thought and talked to, you know, have some good thoughtful board discussions. I am hopeful at some point down the road that we will get there, but we need to grow some scale in the REIT right now.

Bose George: Okay. That is helpful. Thanks. And this in terms of timeline that suggests that it is probably not a 2025 event, will you sort of build out the other pieces. Is that fair?

Michael Nierenberg: No. I mean, I would like to do it in 2024, but that is gone. So I think if we can get it done in 2025, we absolutely will. Because I still believe that our common is fundamentally undervalued.

Bose George: Okay. Great. And actually, just another quick one. The SPAC, I know you cannot discuss it, but is that would that be part of Sculpture to the extent, you know, that that happens? If it does happen, it will be a Rithm company.

Michael Nierenberg: I cannot go into a lot of details, but the way we think about the business if we could create more fee-earning businesses, that flow up to the parent company we are going to do that. And as we think about diversification, there are certain types of vehicles that we could potentially explore.

Bose George: Okay. Great. Makes sense. Thanks.

Michael Nierenberg: Thanks.

Operator: The next question comes from Douglas Harter with UBS. Please go ahead.

Douglas Harter: Thanks. Michael, you talked about, you know, scaling up the REIT in your last answer. You know, just what assets do you find attractive and kind of how would you look to scale up the REIT?

Michael Nierenberg: Doug, I think it is more of the same in what we do. If you look at the business, we have allocated a lot of capital. We, you know, we allocate more and more capital to, you know, the mortgage company has a lot of capital. We, you know, obviously, the MSR business has been extremely beneficial to the company and to shareholders. We continue to believe in that asset. As Baron pointed out, I think we have a little under $850 billion and continue to grow the third-party servicing there. When you look at, you know, you have a just give or take, you know, for purposes of this discussion, 4.40 or 4.5 ten-year note, you have mortgages trading 1.20, 1.30 in the agency market. You look at some of the non-QM, assets that we actually produce or you look at the Genesis side that were where we can produce. I think that is where you are going to see growth on the REIT side.

Douglas Harter: Just along those lines, do you how do you see kind of the investor property loans today, you know, other private label securitizations and you know, kind of what impact, you know, did it Washington discussions around the GSEs have on those opportunities?

Michael Nierenberg: When and if that happens, I think that we are going to be so well positioned between our capital base, the OPs that we have in our system, and our mortgage company, which I think is in a class, you know, a world-class mortgage company. So whether they be investor loans, whether, you know, if the agencies went back to the old way where they get privatized, keep in mind, you know, in the old days, G fees were what, 25 basis points or something, give or take that. Right there? You look at where they are, they are 50 basis points today. So there is probably some given. Part of that could be as you think about the reinsurance market, around, you know, how that could possibly work, and I think that could work. But I think we will be extremely well positioned for that and I would like to see it, quite frankly.

Douglas Harter: And, Michael, just one more if I could. Just on your comments about growing and scaling the REIT, can you do that with your existing capital base, or would you need to raise additional capital to do that?

Michael Nierenberg: It depends. It could be a combination of both. You know, keep in mind most REITs tend to operate by themselves. There is not a lot of M&A activity in the REIT space. You know, when I look at our business and think about permanent capital and having a little under $8 billion, that is a good place to be. Away from our so-called asset management arm. So if we could grow that, and then at some point create management fees, I think we are, you know, we are off to the races.

Douglas Harter: Great. Thank you. Hang stuff.

Operator: The next question comes from Kenneth Lee with RBC Capital Markets.

Kenneth Lee: Hey, thanks for taking my question. Good morning. Just one on Sculptor. You talked about some initiatives to grow the credit business. Wonder if I can get a little bit more detail in terms of, you know, what particular initiatives and what are your expectations in terms of fundraising for this year. Thanks. So on the initiatives, it is more of the same. It is lead with performance. Performance is going to bring in more AUM. You know, the team, you know, there is a large capital formation team. Everybody is out on the road and, you know, seeing LPs. When I think about the initiatives to actually grow whether it be credit and some of the other businesses, you know, there are two ways really to do it. Right? You could do some in M&A, but we cannot be the folks that are going to pay 20 or 30 x, you know, on a multiple basis.

So it could be some, you know, there are a couple of different platforms out there that we are actually looking at. But I think real performance is going to bring in a lot more capital. If you, you know, if you think about it, you know, the company is a great company, obviously, in the press for a bit, but you know, out on the other side, a year-end change removed. Performance, great everywhere. So, you know, I am excited. We talk, we all talk to a lot of LPs, and I think you are going to, we are going to see a fair amount of capital come in. As you think about how much capital to be raised this year, you know what? We right now, the real estate guys are, I cannot give you specific numbers, but those guys are, you know, those guys are doing well.

The credit side is doing well. So we expect a pretty good year. We are not Blackstone or Apollo, unfortunately, but, you know, there is a lot of room for us out there.

Kenneth Lee: Gotcha. Very helpful there. And one follow-up, if I may, just to circle there as well. Any updated outlook around expense base for Sculptor? Is this sort of like still in investment phase there? Just, you know, any kind of color around where expense could trend there? Thanks.

Michael Nierenberg: You know, I think it is more BAU, honestly. You know, we can always evaluate expenses, whether it be at Sculptor, whether it be at the mortgage company, whether we be at Rithm. You know, creating synergies obviously across all of our operating platforms will help, and we continue to work on those. So we could have some saves at some point. I think, yeah. I mean, it is just part of our discipline about risk management. Putting up higher earnings for shareholders.

Kenneth Lee: Gotcha. Thank you very much.

Michael Nierenberg: Thank you, Ken.

Operator: The next question comes from Giuliano Bologna with Compass Point. Please go ahead.

Giuliano Bologna: Good morning, Jeff. Congrats on that. General performance. One thing I would be curious about when you think about the kind of growing the REITs. Would there be any, you know, value or, like, ability to push assets into the Rithm Property Trust structure and use that as a public vehicle, or would you want to create, you know, more separate vehicles over time that have slightly different strategies? On the kind of, you know, REIT side of the world.

Michael Nierenberg: I think it is both. We prefer not to transfer assets from one REIT to another just to be clear on that. We are looking at a transaction for net, you know, for example, in the commercial real estate sector. Where both Rithm and Rithm Property Trust will likely participate as two separate entities. Because, obviously, the amount of capital in Rithm Property Trust is not large enough than, you know, when we think about risk and the sheer size of doing any one thing, we want to make sure that we are balanced from a risk perspective. It is going to be more where we would like to continue to create more vehicles, want to think about other verticals that we may or may not have been in. You know, I pointed out on the energy, infrastructure side.

Couple world-class folks, you know, building a business have third-party capital commitments, trillions needed for that. That is another example of something that will grow. But that will be more on the private fund side.

Giuliano Bologna: And this might be, you know, take a little bit of a different angle, but there is, and obviously done a great job sort of making acquisitions on the mortgage company or MSR side. I am curious when you talk about M&A, are there any opportunities around the mortgage company that, you know, originating servicers and or, you know, bulk pools that you do that you might be looking at. Or you focus on them and, you know, elsewhere on the platform first?

Michael Nierenberg: No. I, you know, listen, we look at everything. If there is something that is accretive, for the capital and for shareholders, we will have a hard run on it. There are not that many mortgage companies quite frankly that are in our opinion from where we sit that are, I should not say worth it, but, like, we do not need anything else. If there is something that is accretive, you know, obviously, we love the MSR asset. That has been very good to us and our shareholders. We will continue to look at that. You know, we are starting to see some real demand for MSR funds as well. So you may see some of that start going off balance sheet. And then that frees up some capital too. Right. You know, what I would say, Giuliano, we if there is something out there and we have an M&A team, we look at anything and everything. Just need to have the expertise around the house to execute.

Giuliano Bologna: That is helpful. And maybe one last one. Yeah. You talked about via Continental for me is C corp conversion. Is that something that you know, you could pursue, you know, in the near term, or is there any kind of, you know, preference to try and something with a mortgage company, partial IPO wise, before you pursue that, or could you pursue a C corp originating sooner?

Michael Nierenberg: I think we could do both honestly. It has got to be something that is highly accretive for both shareholders in the company. You know, if you think about that as a REIT, we paid out, I think, since 2021, $5.8 billion in dividends. You know, if you had that capital and you compounded that capital, it is my belief, I think, the stock would be, you know, in the twenties. Or it should be anyway. So we look at all that stuff, all the stuff goes into our calculation, but I think anything is on the table. You know, knowing as we all know each other, if we could do something yesterday, I would prefer to do it yesterday.

Giuliano Bologna: That is very helpful. I appreciate it. I will jump back in the queue.

Michael Nierenberg: Thanks.

Operator: The next question comes from Eric Hagen with BTIG. Please go ahead.

Eric Hagen: Hi, thanks. Good morning, guys. When we look to the investment portfolio and we strip out the leverage that is associated with the hedging of the MSRs, what is the leverage in that portfolio? How stable do you feel like it is there? And do you feel like there is even some room to apply more leverage if, you know, NewRez were to get spun out at some point?

Michael Nierenberg: Most of the balance sheet, what I would say today, is really around two asset classes. MSRs and our hedges in the mortgage company. So if you think about it, whether we have swaps on, whether we have treasuries on, whether we have agency mortgages, that is a big chunk of the overall balance sheet. At the Rithm level, the, you know, the other large part, what I would say in the non-agency space is the Genesis loans. You know, because we finance those with some of our banks or insurance companies who do securitizations. So the short answer is we could increase leverage, I think we will only do that if we think it is prudent. I do not think we need to right now based on the earnings power of where we sit.

Eric Hagen: Mhmm. Okay. That is helpful. I actually want to ask about Shellpoint because it feels like an increasingly relevant driver of, you know, the earning story at NewRez. I mean, think you mentioned how much you are subservicing them. Maybe you can repeat that. And what was the contribution to earnings from Shellpoint? And do you feel like there are any growth opportunities there even if mortgage rates, like, stay around these levels and new supply is kind of limited?

Baron Silverstein: I mean, look, there continues to be demand on different non-agency products. Right, non-QM, you know, is very, very competitive in the marketplace today for non-QM assets. We continue to be the number one special servicer. So, you know, we continue to see growth. There are opportunities with banks and existing relationships that we take market share based on how they are positioning. So we do look at it as continued growth and, you know, you see that by us adding more loans in the fourth quarter and our pipeline continues to look strong in 2025. So I think you are going to continue to see us, you know, taking market share, you know, especially given a lot of the dislocation you saw last year. In, what I will say, third-party servicing.

Eric Hagen: Yep. Thank you guys so much. Appreciate it, Nava.

Michael Nierenberg: Thanks, Eric.

Operator: The next question comes from Jay McCanless with Wedbush. Please go ahead.

Jay McCanless: Hey, good morning. Thanks for taking my questions. Two for me. The first one, just kind of a general market question for 2025. If you look at the MBA data, mortgage credit availability still sitting at levels around 2012, 2013. Do you guys think just in general, maybe not simply for Rithm, but just in general, do we think mortgage credit availability is going to increase going into this year, or is some of that going to be dependent on what happens with the GSE?

Baron Silverstein: I mean, look, Michael, you know, has talked about this on prior quarters. We have an expectation that, you know, rates are going to stay elevated. So what you are going to continue to see is that consumers obviously are going to, you know, have to deal with the affordability issue of trying to buy a new home. And that is why, you know, we are very much focused on our existing book, you know, but we continue to also see consumers looking to move. So you see that in the amount of inventory and housing inventory that is available for sale continues to basically, what I will say, is pick up. So our expectation is you will probably see a larger purchase market, you know, and we think that home equity loans are going to continue to grow.

And, you know, we and cash outs are going to continue to grow. You know, whether or not any of the government, you know, programs, you know, make an adjustment, I do not really think that is going to be, you know, necessarily a 2025 impact, but, you know, at the same time, you know, our belief is, you know, they are very much focused on affordability and I think that, you know, whatever programs that they adjust are going to basically have, you know, that as a focal point as well. So, you know, it is going to be a little bit of a balance. So I think that mortgage credit availability overall is probably going to stay, you know, in its current state.

Michael Nierenberg: Sure. Twenty-five. Insurance is a problem, obviously. Yeah. Right? I mean, the cost of home ownership has gone up. The rates up. Insurance is a problem. You just had the LA fire, so.

Baron Silverstein: And that just drives into affordability consideration as well.

Jay McCanless: Okay. Great. Thank you. And then my second question, you guys talked at the beginning of the call about infrastructure. I guess, with some of the changes that we are seeing in the new administration, how does that affect your desire and potential customer desire to do more investments in that space? And are there any headlines, insights, road map, whatever, however you want to phrase it, anything that we should be watching for to tell us whether or not you guys are going to get more invested in that space?

Michael Nierenberg: Great question. It is a little bit early. You know, you heard this morning that the administration wants to ban Deep Sea. I am going to tell you that I am not the expert in this stuff. I have two partners, and we have two partners. Who are likely going to join us. World-class, you know, around this. Everybody is talking about the multi-trillion dollar investment opportunity and the huge needs for capital. And that is how we are going to think about it. I mean, think the world this stuff is going to continue to change. But when I look and, you know, I recently sat in some meetings with some of the extremely large so-called hyperscalers. It is a really, really interesting space. You have got to have the expertise to do it, and you have got to have a lot of capital.

Because this to the world is short power. Whether it is AI or something else, the world is short power. And, you know, with our team, and our partners, I am extremely excited about where we could go with this.

Jay McCanless: Okay. That sounds great. Thanks, guys. Appreciate it.

Operator: The next question comes from Matthew Ertner with Jones Trading. Please go ahead.

Matthew Ertner: Hey, good morning guys. Thanks for taking the question. So turning back to NewRez, the funded volume has continued to increase quarter over quarter. You guys have had great growth there. We have seen a lot of competition there and then, you know, kind of within the non-QM and home equity space, you know, there are a lot of other players stepping into the place. Or into the space, you know, how do you continue to drive market share growth there? You know, is it investment in your team? Are you guys growing that out? Can you just speak to that a little bit? Thanks.

Baron Silverstein: It is an investment in the team. It is an investment in our technology. It is an investment in our brand. You know, those are the three key initiatives across the board. Right? We continue to believe there is significant upside, you know, for us on just focusing on our own homeowners. Haven’t even really if we felt like, you know, we wanted to get into new customer acquisition, you know, we and we do new customer acquisition on our distributed retail platforms, but, like, on our, you know, on our call centers, it is really just focused internally on our own portfolio and making sure that we are maximizing their. So I would tell you unequivocally are making significant platform investments on all of those initiatives.

Matthew Ertner: Got it. That is helpful. Thank you.

Operator: This concludes our question and answer session. I would like to turn the conference back over to Michael Nierenberg for any closing remarks.

Michael Nierenberg: Well, thanks for everybody’s questions. Really thoughtful this morning. Obviously very excited about where we sit as a business and all of our different business lines and look forward to updating you after Q1. More to come. Have a great day and a great rest of the week.

Nick Santoro: Thanks, everyone.

Operator: The conference is now concluded. Thank you for attending today’s presentation. You may now disconnect.