Rithm Capital NYSE: RITM reported second-quarter earnings available for distribution of $338.9 million, or $0.60 per diluted share, while GAAP net income was $20.2 million, or $0.04 per diluted share. Chairman, Chief Executive Officer and President Michael Nierenberg said results reflected contributions from the company’s Newrez mortgage business, Genesis Capital lending platform, Sculptor and Crestline asset-management businesses, and Elecor Properties real estate portfolio.
Book value was $6.9 billion, or $12.33 per share, at quarter-end, while the company reported $2.1 billion of cash and liquidity. Rithm paid a quarterly common dividend of $0.25 per share. Nierenberg said the difference between earnings available for distribution and GAAP income was partly related to hedges on the company’s mortgage servicing rights portfolio.
Asset Management Expansion
Rithm said it manages more than $100 billion of investable assets between its balance sheet and third-party capital. Its third-party asset-management operations, including Sculptor, Crestline and Rithm-managed funds, oversee approximately $61 billion for more than 200 clients and limited partners. Nierenberg said 71% of the firm’s asset-management assets under management are longer-term capital.
Sculptor’s multi-strategy fund generated an approximately 8% net return in the first half of 2026, according to the company. Nierenberg said the fund’s three-year net return was 12.3%, with volatility of 4.7%. He said the investment teams had reduced risk in response to market volatility.
During the question-and-answer session, Nierenberg said Rithm sees the potential to double asset-management assets under management over the next one to two years, though he emphasized that the company is focused on investment performance rather than pursuing asset growth for its own sake.
Current fundraising efforts are centered on asset-based finance, direct lending, capital solutions, multi-strategy investing, stabilized core real estate and real estate credit. The company is also developing insurance and infrastructure offerings and working with bank partners on private-wealth distribution, management said.
Chief Financial Officer Nick Santoro said incentive fees at Sculptor during the quarter were driven by an off-cycle crystallization of incentive revenue. He said roughly 70% of Sculptor’s incentive revenue is typically recognized in the fourth quarter. Excluding the quarter’s Sculptor incentive income, Santoro said Rithm’s core earnings available for distribution run rate should be about $0.50 per share.
Newrez Reports Higher Pretax Income
Newrez, Rithm’s mortgage origination and servicing business, reported approximately $308 million in second-quarter pretax income excluding mark-to-market effects, up 12% from the prior quarter. The segment generated a 22% return on equity, according to President Baron Silverstein.
Silverstein attributed the result to disciplined origination activity, higher servicing fees, increased recapture and lower amortization despite interest-rate volatility. Funded mortgage volume was $15.9 billion, up 1% quarter over quarter. Newrez also acquired $5 billion of mortgage servicing rights through co-issue transactions, up 45% from the prior quarter.
Newrez said wholesale and consumer-direct channels represented 40% of total originations, up 11% from the previous quarter. Silverstein said the company maintained pricing discipline and did not pursue market share at the expense of returns.
The company is investing in proprietary artificial-intelligence tools as well as technology partnerships with Valon and HomeVision. Newrez said its cost per loan is currently about one-third below the industry average and is projected to be 50% below the industry average after the Valon and HomeVision integrations. Management expects the transition to the Valon servicing platform in early 2027 to produce more than $65 million in annual expense savings, reducing direct cost per loan by 21% to $93.
Newrez added eight third-party servicing clients during the quarter and boarded $27 billion of new loans. Silverstein said Ginnie Mae delinquencies were stable from the previous quarter and that overall delinquencies remained low by historical standards.
Nierenberg said lower prepayments have supported MSR cash flows, though the company has been selective in deploying capital as MSR valuations remain relatively full. Rithm manages approximately $865 billion of owned and third-party MSRs, he said.
Genesis Lending and Real Estate Activity
Genesis Capital originated $1.9 billion during the quarter and produced approximately $42 million of pretax income, up about 26% from the prior quarter. Nierenberg said the residential transitional lending platform generated a 17% annualized operating return on equity.
The Genesis portfolio had a loan-to-after-repaired-value ratio of approximately 63%, a loan-to-value ratio of 68%, and a loan-to-cost ratio of 76%. Construction loans represented about 50% of the portfolio, bridge loans accounted for about 34%, and renovation loans represented approximately 12%.
Management said demand for Genesis’ short-duration, high-coupon lending products remains strong from insurance companies, funds and separately managed accounts. Nierenberg said the company expects additional growth in multifamily lending, where loan sizes average roughly $10 million to $11 million, while continuing to focus on sponsor quality and underwriting discipline.
Elecor Properties, Rithm’s office real estate operation, owns 10 core assets totaling 9.9 million square feet in New York and San Francisco. The portfolio was 86.5% leased at quarter-end, with average in-place rent of $90 per square foot and a weighted average lease term of 8.3 years.
Head of Real Estate Peter Brindley said Elecor executed or had pending leases for more than 681,000 square feet year to date, at weighted average initial rents of approximately $100 per square foot. The company also identified about $44 million of operating efficiencies since the acquisition.
Elecor closed a $283 million commercial mortgage-backed securities financing for 1325 Avenue of the Americas during the quarter and refinanced 31 West 52nd Street after quarter-end. Management is evaluating potential joint ventures for select assets and financing options for unencumbered properties.
Nierenberg said Rithm does not currently expect to repurchase shares or raise its dividend, preferring to retain and redeploy capital to expand the business. He said any repurchase decision would ultimately be made by the board.
About Rithm Capital (NYSE:RITM)
Rithm Capital Corporation is a specialty finance company that originates, acquires and manages structured credit investments collateralized by real estate assets in the United States. The company focuses primarily on senior floating-rate loans secured by multifamily, commercial, industrial and single-family rental properties, aiming to deliver attractive risk-adjusted yields through a diversified portfolio of floating-rate real estate debt.
In addition to senior loans, Rithm Capital invests in residential mortgage-backed securities, including agency and non-agency pools, as well as other real estate-related credit instruments.
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