RPT Realty Q4 2024 Earnings Report

RPT Realty EPS Results

• Actual EPS: $0.01
• Consensus EPS: -$0.02
• Beat/Miss: Beat by +$0.03
• One Year Ago EPS: N/A

RPT Realty Revenue Results

• Actual Revenue: N/A
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

RPT Realty Announcement Details

• Quarter: Q4 2024
• Date: 1/30/2025
• Time: Before Market Opens
• Conference Call Date: Thursday, January 30, 2025
• Conference Call Time: 8:00AM ET

RPT Realty (NYSE:RPT) owns and operates a national portfolio of open-air shopping destinations principally located in top U.S. markets. The Company's shopping centers offer diverse, locally-curated consumer experiences that reflect the lifestyles of their surrounding communities and meet the modern expectations of the Company's retail partners. The Company is a fully integrated and self-administered REIT publicly traded on the New York Stock Exchange (the "NYSE"). The common shares of the Company, par value $0.01 per share (the "common shares") are listed and traded on the NYSE under the ticker symbol "RPT". As of September 30, 2023, the Company's property portfolio (the "aggregate portfolio") consisted of 43 wholly-owned shopping centers, 13 shopping centers owned through its grocery-anchored joint venture, and 49 retail properties owned through its net lease joint venture, which together represent 14.9 million square feet of gross leasable area ("GLA"). As of September 30, 2023, the Company's pro-rata share of the aggregate portfolio was 93.5% leased.

RPT Realty Q4 2024 Earnings Call Transcript

Presentation

[Operator]

Thank you for sharing today.

[Operator]

My name is Ian, and I will

[Operator]

be back on the top of the website. At this time, I would like to welcome everyone to the Rhythm Property

[Operator]

Process 4th Quarter Conference Call.

[Operator]

All lines have been muted and I would now like to hand the call over to Emma Ulla, Executive General Counsel of Consumer Financial. You may begin your conference.

[Emma Bolla, Associate General Counsel at Rithm Capital]

Thank you, and good morning, everyone. I want to thank you for joining us today for Prism Property Trust's Q4 2024 Earnings Call. Joining me today are Michael Nierenberg, CEO of Prism Capital and of Prism Property Trust and Mary Doyle, CFO of Rhythm Properties. Throughout the call, we are going to reference the earnings supplement that was posted this morning to the Rhythm Property Trust website at www.rismproperties.com. If you've not already done so, I encourage you to download the presentation now.

[Emma Bolla, Associate General Counsel at Rithm Capital]

I would like to point out that

[Emma Bolla, Associate General Counsel at Rithm Capital]

certain statements made today will

[Emma Bolla, Associate General Counsel at Rithm Capital]

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 the accompanying 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

[Emma Bolla, Associate General Counsel at Rithm Capital]

our earnings release. With that,

[Emma Bolla, Associate General Counsel at Rithm Capital]

I will turn the call over to Michael.

[Michael Nierenberg, Chairman, President & CEO at Rithm Capital]

Thanks, Emma. Good morning, everyone, and thanks for joining us. I have some short comments and then we'll go through the supplement and then we'll do a little bit of Q and A. As we think about this vehicle, we took over what we managed the we've managed to contract that will presumably known as GreenTree Act in June of 2024. For the first time in 3 years, we have to report the company had a positive economic result than before.

[Michael Nierenberg, Chairman, President & CEO at Rithm Capital]

While $0.06 a share in is a start, we look forward to our ability to continue growing earnings and our capital base. As we when we took over the company, the thought was with the commercial real estate market extremely dislocated, we were going to turn this vehicle into getting out of the so called legacy resi non performing loan business that we're adding that as a firm, but in this vehicle, we're turning into an opportunistic vehicle focused on commercial real estate. So in doing that, we repositioned the balance sheet. We shored up all the financing around the assets. We sold down legacy residential positions and we reinvested the proceeds into high quality commercial real estate.

[Michael Nierenberg, Chairman, President & CEO at Rithm Capital]

In doing all that, you can see the economic result, which in the quarter, again, we made $0.06 diluted share from a GAAP perspective. And we're still maintaining the dividend at $0.06 with the belief that we're going to continue to grow out of this so called hole that was part of this company for many, many years. How are we going to get there? How are we thinking about this vehicle on a go forward basis? Because right now it's roughly $250,000,000 call it of equity trades at give or take 50% of book.

[Michael Nierenberg, Chairman, President & CEO at Rithm Capital]

So how are we going to get there? One is we're going to need more capital. So when we think about this top price, we think the equity is extremely undervalued. So we'll likely be in the market in Q1 with a preferred equity deal. This will do a couple of things.

[Michael Nierenberg, Chairman, President & CEO at Rithm Capital]

1, it's going to help us shore up our capital base. 2, it's going to give us more capital to invest, which therefore is going to help us create more earnings for our shareholders. We'll continue to step down legacy assets that don't meet our current thresholds, return thresholds. It looks like the balance sheet is for the most part very, very clean. There's a bunch of retained interest that sit on the balance sheet that we can't sell every sort of older securitizations.

[Michael Nierenberg, Chairman, President & CEO at Rithm Capital]

Those will be there for quite some time. That's number 1. Number 2, however, on that is the liability structure, they were issued with very low rates. So we feel good about that. And again, there's not much to do there.

[Michael Nierenberg, Chairman, President & CEO at Rithm Capital]

And then finally, what we're going to do is we're going to seek M and A opportunities to truly grow the company. As you know, at Rhythm Capital, the pipeline of M and A across the firm is extremely broad. And we do we are optimistic and we feel like we're going to be able to do something here. The playbook is very similar to New Residential. When we started that vehicle at Fortress, it was externally managed and that was in 2013.

[Michael Nierenberg, Chairman, President & CEO at Rithm Capital]

We started roughly $1,000,000,000 of capital. Today, it has $7,800,000,000 And along the way, we have a bunch of M and A and we've put a bunch of assets. And I think we're going to be able to do we'll be able to do the same thing here. So with that, I'm going to turn to the supplement and begin on Page I'm going to begin on page 3. Again, Rhythm Property Trust was formerly known as Great Ajax.

[Michael Nierenberg, Chairman, President & CEO at Rithm Capital]

I gave you the comments that we set this thing up or reposition the company to take advantage of what we think is one of the bigger investing opportunities we've seen in many, many years in the commercial real estate sector as well as we'll look for other opportunistic ways to deploy capital. Our pipeline today is roughly $1,000,000,000 of things we're looking at. And we all know not everything fits 1 box, less than 1 box. So we're extremely selective. When we look at the amount of capital in commercial real estate, right now there's $50,000,000 in commercial real estate that's going to continue to grow.

[Michael Nierenberg, Chairman, President & CEO at Rithm Capital]

When we look at the investments, we're targeting something in the low double digits. When you look at the team and you think about the folks that work on this business, again, this vehicle is externally managed. There's not whether it's $200,000,000 quite frankly or $20,000,000,000 the amount of effort and the team is still the same and we take great pride in trying to create value for shareholders. Page 4, financial results, dollars 2,900,000 in GAAP income for the quarter, dollars 0.06 per diluted share. DAD earnings available for distribution, a penny.

[Michael Nierenberg, Chairman, President & CEO at Rithm Capital]

Again, first positive result in 3 years, while a penny is not much. We're optimistic on where we're going to go with this. In fact, you're doing the same as $0.06 per common share. Cash and liquidity on balance sheet at the end of Q4 is $64,000,000 and total shareholder equity is $247,000,000 Looking at book value, dollars 5.44 essentially unchanged from Q3. One thing I want to point out there is rates.

[Michael Nierenberg, Chairman, President & CEO at Rithm Capital]

When you look at rates across curve, we're up approximately 60 basis points. So if you think about the result, rates up 60 basis points, book value essentially unchanged. And a lot of that is directly to investing that we did in the quarter and then prior quarters where we put on floating rate assets at low double digit returns and that enabled us to get to this positive result. If you look at Page 5, just a couple of points here. As I mentioned, we repositioned the balance sheet.

[Michael Nierenberg, Chairman, President & CEO at Rithm Capital]

What does that mean? We slowed down a little under $340,000,000 from a gross standpoint of legacy residential mortgage assets. We deployed, as I pointed out, dollars 50,000,000 into commercial real estate. GAAP net income grew from a loss in Q2 of $18,000,000 positive result of $2,900,000 and then earnings available for distribution grew from a loss of little under $10,000,000 to a little bit, so call it kind of flat. And then we also improved forward the financing arrangements we had in the company.

[Michael Nierenberg, Chairman, President & CEO at Rithm Capital]

As we look ahead, I think this is straightforward commercial real estate debt. We're targeting what I would say low double digit returns. There will be some opportunities to deploy capital at higher returns, but that's for now that's how we're thinking about it. There's no legacy issues that we see right now that are going to cause any problems for the company. If you think about the commercial real estate sector, anybody that's been investing in office over the past number of years has had is going to have many issues.

[Michael Nierenberg, Chairman, President & CEO at Rithm Capital]

Right now where we stand, we feel very, very comfortable with the opportunity ahead of us. Okay. So, just talk about opportunities and yields. Again, we're going to target something in the low double digits. We'll look for some opportunistic situations where we're going to be able to deploy capital at higher returns as well.

[Michael Nierenberg, Chairman, President & CEO at Rithm Capital]

So really to summarize for me and then we'll turn it over to Q and A. One is on the right path. Team is working hard. We are going to need more capital. The capital we're going to try to do is raise money in the pref market in Q1.

[Michael Nierenberg, Chairman, President & CEO at Rithm Capital]

And then from there, we'll continue to deploy capital. We'll hunt some M and A opportunities. And again, the playbook is very similar to what we did when at Fortress where we had started with $1,000,000,000 of capital in new residential and grew that to where it has a little bit under $8,000,000,000 to date. So with that, I'm going to turn it back to the operator and then we'll have some Q and A.

[Emma Bolla, Associate General Counsel at Rithm Capital]

Thank you.

[Operator]

Our next question comes from the line of Tom Afterwood with BTIG. Your line is open. Thank you and good morning

[Thomas Catherwood, MD & REITs Equity Research at BTIG]

everybody. Michael, first off, congratulations on profitability in 4Q. It's great to see that. And then appreciate your comments as far as the opportunities and the strategy for growth going forward, but kind of looking at RBT for 8 plus months. How is your view on commercial real estate evolve?

[Thomas Catherwood, MD & REITs Equity Research at BTIG]

And are the opportunities that you're pursuing the same as they initially were? Or have they shifted over time?

[Michael Nierenberg, Chairman, President & CEO at Rithm Capital]

Good question, Tom. Here's what I would say and there's all this talk about opportunities for commercial real estate. Quite frankly, if you roll back the clock in a rhythm like we have deployed 100 of 1,000,000 of dollars into different commercial real estate opportunities. While saying that, we're not the there are opportunities to do so. We've seen a lot of office over the course of the past year, year and a half.

[Michael Nierenberg, Chairman, President & CEO at Rithm Capital]

Not everything works, quite frankly. We are starting to see more opportunities. We're seeing, for example, working with some of the large money center banks where we could provide a B note or mezz note on some underlying loan that they're making helps from a capital standpoint at the bank. And for us it creates that double digit yield that we're targeting. The net of it is quite frankly that we think on a go forward basis you're going to see more opportunities.

[Michael Nierenberg, Chairman, President & CEO at Rithm Capital]

2020 capital out there chasing, I think key for us is when you look at Rhythm as an organization between Sculptor, which has their own thing, has raised a lot of money around the real estate funds and has great track record. At the rhythm level where we've deployed capital. And now in this vehicle where we repositioned, we see everything. But again, not everything fits. We're looking for debt.

[Michael Nierenberg, Chairman, President & CEO at Rithm Capital]

We're going to look for some more opportunistic situations and it's going to continue to come our way. We don't need to be off as everything. We have the expertise here to do that. But it's going to be more around the loan side, I think, and working with some of the larger banks in some distressed opportunities.

[Thomas Catherwood, MD & REITs Equity Research at BTIG]

I appreciate this thought. And that's kind of where I wanted to go next was, were you somewhat surprised before that we saw a slower pace of loan sales out

[Thomas Catherwood, MD & REITs Equity Research at BTIG]

of banks and could that accelerate in 'twenty five?

[Michael Nierenberg, Chairman, President & CEO at Rithm Capital]

If you think it will accelerate in 'twenty five, when you think about and I worked at the Lord's Bank for 5 years. When you think about the banks, unless you're forced to take that mark, typically you're going to hold on to that asset. As you see banks taking more marks, obviously the banking sector had a great, great run. You look at bank earnings, they're fantastic.

[Michael Nierenberg, Chairman, President & CEO at Rithm Capital]

I think you'll see them write down more of their kind of problem real estate. The other thing what you're going to see is our belief is that rates are going to stay higher for longer. Everybody was betting on, for example, 10, you know, like printed out rates were up 60 basis points, right? So if you look, I think 10s went from 10% to roughly 4% today. And at the end of the year, you're up 60%, now you're up even a little bit more.

[Michael Nierenberg, Chairman, President & CEO at Rithm Capital]

When you look at general belief was that rates are going to come back down because the Fed is cutting rates. You had the Fed meeting yesterday and the Fed is basically saying we're on hold for now, but the economy is strong. Rates are not going to come down that point. And as a result, I think you're going to see more problems in commercial real estate as people as things reset higher and debt becomes a problem. So I think you'll see more assets come out.

[Thomas Catherwood, MD & REITs Equity Research at BTIG]

Appreciate your color on that. And then last one from me, on the preferred, maybe just kind

[Thomas Catherwood, MD & REITs Equity Research at BTIG]

of 2 questions. First, do you have a magnitude in mind at this point? And the second one is,

[Michael Nierenberg, Chairman, President & CEO at Rithm Capital]

that was highly accretive, we're going to continue to see those. We have a stock trading, I didn't the 20, roughly $2.85 or something like that. And the value of call it $5,500,000 We prefer not to issue stock down here if we don't have to. That's why tapping into the preferred market, even if it's higher coupon. I will point out that if you go back in time, there's covenants around the unsecured and there is a need to buffer the capital raise around some of that unsecured covenants.

[Michael Nierenberg, Chairman, President & CEO at Rithm Capital]

Now, we have quick capital, we have cash and liquidity on balance sheet, but the net of it is we want to do both. 1, take care of some of the high yield notes. 2, we have more capital to deploy so we can grow earnings.

[Thomas Catherwood, MD & REITs Equity Research at BTIG]

Understood. Appreciate the comments, Michael. Thank you.

[Michael Nierenberg, Chairman, President & CEO at Rithm Capital]

Thank you.

[Operator]

The next question comes from the line of Jason Stewart with Janney. Your line is open.

[Jason Stewart, Director - Mortgage Finance at Janney Montgomery Scott]

Hey, Michael. Good morning.

[Jason Stewart, Director - Mortgage Finance at Janney Montgomery Scott]

Can you talk about the strategy evolving and you're moving maybe some capital structure down to the middle part of the capital structure on the asset side? Have you thought about how the financing needs to evolve and where that would meet your needs in terms of hitting ROE and the term financing of those assets?

[Michael Nierenberg, Chairman, President & CEO at Rithm Capital]

The answer is yes. When we do something, if we're going to partner with, call it, one of our large money center banks, typically, we'll try to do something in conjunction with financing unless the returns that we could justify an unlevered return without putting any leverage on that asset. There's plenty of financing available to us at the corporate trust level. Keep in mind, Jason, as a firm, at the rhythm level, the balance sheet mortgage company and everything else, the balance sheet is $40,000,000,000 So when you think about the power of Rhythm supporting being that this vehicle externally managed and that there is a Rhythm employee, the power of our franchise, I think is pretty broad. We have a lot of access to financing.

[Michael Nierenberg, Chairman, President & CEO at Rithm Capital]

So we're not going to be something unless it leads to obviously the churn hurdles. So the short answer is going back, yes. But there's plenty of financing available, whether that be in the term financing on an asset or some straight financing with an insurance company and or other ways to finance our business.

[Jason Stewart, Director - Mortgage Finance at Janney Montgomery Scott]

Okay. I think I'm looking at Slide 7. I'm just thinking about ROE on a

[Jason Stewart, Director - Mortgage Finance at Janney Montgomery Scott]

go forward basis. And if

[Jason Stewart, Director - Mortgage Finance at Janney Montgomery Scott]

you move from senior down into south to choose top line gross ROVs to ever preferred and start to tighten to get more opportunistic.

[Jason Stewart, Director - Mortgage Finance at Janney Montgomery Scott]

Where the sweet spot

[Jason Stewart, Director - Mortgage Finance at Janney Montgomery Scott]

in capital structure on the asset side would be in conjunction with financing, how far down you're thinking about going in the future on the asset side of the capital structure?

[Michael Nierenberg, Chairman, President & CEO at Rithm Capital]

We're not going to set up this vehicle to be a so called first loss vehicle just to seek yield. I'll be really clear about that. There's a ton of lending demand where it could be transitional lending, it could be this is a ton of demand for lending. And when you look even in our Genesis business that's a wholly owned sub of Rhythm, that business residential transitional loans did almost $4,000,000,000 of production last year. You look at the underlying unlevered return and it's anywhere from give or take 10% to 11%.

[Michael Nierenberg, Chairman, President & CEO at Rithm Capital]

So we're going to see plenty of opportunity. We're not going to be the again, the 1st loss piece provider on different deals to do something to see if you'll we want to make sure one is we're 1st and foremost, credit first, in underwriting and then we're going to sell for return and we're confident we'll get there. We did a loan out of rhythm going back in 24 at so for plus 700 on a development project with Kushner. And that was, if you think about it, it's a 12 plus percent unlevered return. It's a 20 20 of opportunity.

[Jason Stewart, Director - Mortgage Finance at Janney Montgomery Scott]

Got it. Okay. That's really helpful.

[Jason Stewart, Director - Mortgage Finance at Janney Montgomery Scott]

And then just going back

[Jason Stewart, Director - Mortgage Finance at Janney Montgomery Scott]

real quick to the office market.

[Jason Stewart, Director - Mortgage Finance at Janney Montgomery Scott]

I mean, it does seem like

[Jason Stewart, Director - Mortgage Finance at Janney Montgomery Scott]

on the margin, the conversation has shifted a little bit more positively. Do you think that unlocks more opportunity? Or do

[Jason Stewart, Director - Mortgage Finance at Janney Montgomery Scott]

you think how do you

[Jason Stewart, Director - Mortgage Finance at Janney Montgomery Scott]

think how is this conversation evolving I guess and the opportunities in office?

[Michael Nierenberg, Chairman, President & CEO at Rithm Capital]

There we've seen a lot of office. I mean if you look at the pipeline even from some of the larger brokers, there's a ton of office. There was a building that traded, I think today, my old fortress, Sogdag around 1345, that traded to Blackstone. I mean, there's a ton of things that are that we see in office. Among things that, if we're going to be in office and you're for example, if you're going to be on the equity side of that, that equity investment in Rhythm Properties for us has to be a multiple.

[Michael Nierenberg, Chairman, President & CEO at Rithm Capital]

We have to be we have to get a multiple of

[Michael Nierenberg, Chairman, President & CEO at Rithm Capital]

what we think that

[Michael Nierenberg, Chairman, President & CEO at Rithm Capital]

your building is worth, if we're going to go in on that. I'll tell you that again, we prefer to be in debt rather than equity, as we think it's a better place to be right now, somewhere we can put money out. There's tons and tons of office that continue to come out. A lot of it's bad, quite frankly. And when I say bad, it's like, I don't know, a lot of that has been repurposed.

[Michael Nierenberg, Chairman, President & CEO at Rithm Capital]

So you got to be really, really selective. And this is again, there's a ton of need for capital. If you think if we're going to go back into the office, There's a ton of need for money for CapEx in a lot of these buildings because everybody wants to be in a new building. But we think plenty, a lot of it doesn't work.

[Jason Stewart, Director - Mortgage Finance at Janney Montgomery Scott]

Okay. Thanks

[Jason Stewart, Director - Mortgage Finance at Janney Montgomery Scott]

for the color. Appreciate it.

[Michael Nierenberg, Chairman, President & CEO at Rithm Capital]

Thank

[Michael Nierenberg, Chairman, President & CEO at Rithm Capital]

you, Jason.

[Operator]

Our next question comes from the line of Stephen Laws with Raymond James. Your line is open.

[Stephen Laws, Managing Director at Raymond James Financial]

Hi. Good morning, Michael. Just on the $28,000,000 of capital allocated CRE assets, 20%.

[Stephen Laws, Managing Director at Raymond James Financial]

Can you talk about the ramp and on the current equity base, how high that can hit or maybe ask another way, how much equity supports some of that investments in legacy assets that are going to stay on the balance sheet?

[Michael Nierenberg, Chairman, President & CEO at Rithm Capital]

It's a good question, Stephen. So, let me address the second part. It's everything we do not everything, but everything we do on a go forward basis is going to be around commercial real estate. So, for example, if we hit the market with let's just use round numbers and I'm hopeful we can do this. If we hit the market with a couple of 100,000,000 of preferred equity over the course of the year, whether we do it in one swoop or not, I don't know if we're going to do it now.

[Michael Nierenberg, Chairman, President & CEO at Rithm Capital]

This is, call it, roughly 50% of that if we wanted to retire the outstanding debt. We can do that, then you'd have another $100,000,000 of equity going into you'd have another $100,000,000 going into commercial real estate. When you look at the money that we deployed in commercial real estate so far, it's roughly we've added about $270,000,000 from a gross standpoint. Again, most, if not all, has floating rate. And when you think about the advance rates on this stuff and where we are, advance rates can be anywhere from, call it, 80% to 85% in that range as we think about the no mark to market for facilities.

[Michael Nierenberg, Chairman, President & CEO at Rithm Capital]

The rest of the stuff, quite frankly, you have a bit of a sense consolidated on balance sheet. I pointed out earlier in my opening remarks. You just can't sell it because of the legacy residential RMBS. So if you think about $250,000,000 of kind of equity capital and looking at our position, the balance sheets are really not that much left to sell down and release a ton of equity. The rest of it is really going to be in residential real estate right now.

[Stephen Laws, Managing Director at Raymond James Financial]

Appreciate the comments there. And touching base on the investments, I guess, can you update us on any investment activity in the month of January? And then bigger picture, as you look at your current pipeline, can you talk about the relative attractiveness additional CMBS investments versus the senior and highest loan opportunities you're seeing in your pipeline?

[Michael Nierenberg, Chairman, President & CEO at Rithm Capital]

We're looking at both. We look at every deal that comes out. We see every deal. It's going to be a combination is what I would say. Same comment going back to Jason's question.

[Michael Nierenberg, Chairman, President & CEO at Rithm Capital]

We're not going to be I've been doing this a long time, credit matters first, underwriting matters first, particularly in commercial real estate. You want to make sure that you're crossing your P's and dotting your I's. So it's a combination of, call it, bonds, as well as putting money out. We also think, and if you think about M and A, we at Rhythm, we see a ton of M and A. We look at hundreds of deals a year.

[Michael Nierenberg, Chairman, President & CEO at Rithm Capital]

If you look at our track record around the stuff that we've done, it's been pretty impressive quite frankly. That doesn't mean last year we did we talked with a management contract of this and we did another mortgage company deal. So it's not like we're going to do a ton, but the opportunities I think on the M and A side to 1, grow the capital base and then 2, put out capital that's going to be more accretive than just for a AAA CMBS bond.

[Stephen Laws, Managing Director at Raymond James Financial]

Great. And then lastly, over the course of the year, I know most of the securities on the balance sheet is available for sale. I mean, are those investments that you think eventually you wrote that of into CRE Whole Loans or do you think you these are longer term holds and just part of the longer term targeted asset mix as you put together this portfolio?

[Michael Nierenberg, Chairman, President & CEO at Rithm Capital]

When I look at forward forward leverage yields on the remaining portfolio where we currently sit, our forward returns are to an average, I would say, anything from 12% to 18%. So there's really no rush to sell them unless you have the ability to reinvest that capital into something that's more accretive. We spend a lot of time between on the resi side, our residential teams, our commercial teams, we spend a lot of time looking at all kinds of different assets. The book I pointed out is we'll probably be able at $5.5 stocks at $2.80 so we think we have to get our cheap. But we got to have a reason to actually just sell something.

[Michael Nierenberg, Chairman, President & CEO at Rithm Capital]

We don't give anything away. That's not who we are. But we need to make sure that we look at what's the opportunity on the other side of something that we're going to sell is what I would say.

[Stephen Laws, Managing Director at Raymond James Financial]

Great. So can you invest actively in January, you

[Stephen Laws, Managing Director at Raymond James Financial]

can share with us today or

[Michael Nierenberg, Chairman, President & CEO at Rithm Capital]

Yes. A little bit more in the top part of the capital stack around some of the newer CMBS deals, kind of time capital out. I think we're sitting on the $65,000,000 of cash and liquidity. We want to raise a bunch here in the Q1, just to bolster the balance sheet, have a hard look at some of the debt and then get ready to deploy more capital. And then if there's something highly accretive, we'll come back to the marketplace and figure out a way to take our track record in doing this stuff and take this company from where it has $250,000,000 of call it equity value to something that's multiple billions.

[Michael Nierenberg, Chairman, President & CEO at Rithm Capital]

So that's extremely relevant.

[Stephen Laws, Managing Director at Raymond James Financial]

Yes. Fantastic. Appreciate the comments this morning, Michael. Thank you.

[Michael Nierenberg, Chairman, President & CEO at Rithm Capital]

Thanks, Steven.

[Operator]

I should come from the line of Bob Turner with UBS. Your line is open.

[John Turner, Private wealth client associate at UBS Group]

Hi, John. Can you talk about the relative attractiveness of using several levers with the keynote versus kind of financing through warehouse lines and kind of offer to better opportunities today?

[Michael Nierenberg, Chairman, President & CEO at Rithm Capital]

Again, going back to my earlier comments, we're going to look we look at everything. There's going to be a combination of both. When you think about B notes and you think about issuing loans, obviously, you got February 1st. Structural leverage, when you hit the securitization markets, that is attractive. While I'll tell you that, the balance sheet that we have here is small.

[Michael Nierenberg, Chairman, President & CEO at Rithm Capital]

The equity capital base is small. And until we get to real scale, there's no there's nothing that we're going to issue in the call it the securitization markets, because underwriting or creating conduit loans per se. We'll be working more with partners on the origination side. I think you can see you may even see at some point where we partner with some of the other businesses that we have here at Rhythm on some opportunities for commercial real estate. We have a lot of capability to gain some of our wholly owned subs.

[Michael Nierenberg, Chairman, President & CEO at Rithm Capital]

Yes, on the Rhythm balance sheet, the same team, again, where externally managed. So the Rhythm employees, the same guys and gals that work

[Michael Nierenberg, Chairman, President & CEO at Rithm Capital]

on the

[Michael Nierenberg, Chairman, President & CEO at Rithm Capital]

Property Trust that work on Rhythm. Obviously, Rhythm has plenty of capital. So you're going to see you're going to see situations, I think, where we as a firm more different than I think Blackstone does on some of their stuff. So we as a firm are going to partner with some of our other subs and operating companies.

[John Turner, Private wealth client associate at UBS Group]

Got you. Thank you, Michael.

[Operator]

There are no further questions at this time. I'd like to hand things back over to Michael Nierenberg for some closing remarks.

[Michael Nierenberg, Chairman, President & CEO at Rithm Capital]

Thanks. Appreciate you guys joining the call and asking the questions. It's helpful to all of us here at Rhythm, profitable to us in Rhythm Capital. What I would say again just to close in my closing remarks, this vehicle will be a lot more active we hope over the course as we go forward. Our ability and track record to create value for shareholders I think is you don't have to look further to some of the other things that we as a group have done, the same group that's created Rhythm Capital.

[Michael Nierenberg, Chairman, President & CEO at Rithm Capital]

We have the same group that are working on Ribbon Capital plus some of our other optos. And we're excited about where we think we can take the company. We'll be in the capital markets hopefully here in the near future and stay tuned. The desire to grow earnings and make this thing great and grow the share price is something that's extremely important to us. We look forward to updating you soon.

[Michael Nierenberg, Chairman, President & CEO at Rithm Capital]

Have a great day.

Participants

Analysts

• Emma Bolla, Associate General Counsel at Rithm Capital
• Michael Nierenberg, Chairman, President & CEO at Rithm Capital
• Thomas Catherwood, MD & REITs Equity Research at BTIG
• Jason Stewart, Director - Mortgage Finance at Janney Montgomery Scott
• Stephen Laws, Managing Director at Raymond James Financial
• John Turner, Private wealth client associate at UBS Group