Rithm Property Trust's Q3 2025 Earnings: Assessing Dividend Sustainability Amid Declining Performance

Rithm Property Trust Inc. (NYSE: RPT) has navigated a challenging operating environment in Q3 2025, with declining earnings and asset values raising questions about the sustainability of its $0.06-per-share dividend. Despite reporting a GAAP comprehensive loss of $(0.4) million and negative earnings available for distribution of $(0.7) million, the company maintained its dividend payout, distributing $2.7 million to common shareholders, according to a Morningstar press release. This analysis evaluates whether Rithm's dividend policy remains viable amid deteriorating financial metrics and what investors should watch for in the coming quarters.

A Quarter of Declines

Rithm's Q3 2025 results underscored a deteriorating financial landscape. Net interest income fell to $3.99 million, down from $4.21 million in Q2 2025, while an unrealized gain on mortgage loans held-for-sale plummeted to $0.19 million from $2.52 million in the prior quarter, according to a TradingView report. The company's book value per common share held steady at $5.30, but this stability masked broader operational struggles, including a GAAP comprehensive loss of $(0.01) per diluted share and a negative earnings available for distribution of $(0.02) per share, as the Morningstar release shows. Analysts had projected revenue of $5.16 million and earnings of $0.01 per share, making the actual results a significant miss, according to a Yahoo Finance preview.

Dividend Sustainability: A Question of Metrics

The sustainability of Rithm's dividend hinges on the lens through which it is evaluated. Using traditional earnings per share (EPS), the company's negative payout ratio-where dividend payments exceed reported earnings-raises red flags. However, as noted by analysts, this metric is often misleading for REITs due to non-cash expenses like depreciation, according to a MarketMinute article. Instead, investors typically rely on Funds From Operations (FFO) and Adjusted Funds From Operations (AFFO), which strip out non-operational distortions.

Unfortunately, Rithm's Q3 2025 report did not disclose FFO or AFFO figures, leaving a critical gap in assessing its cash flow capacity, as noted in the TradingView report. A healthy FFO or AFFO payout ratio for a REIT generally falls between 70–80%, suggesting that distributions are comfortably covered by operational cash flow, as the MarketMinute coverage explains. Without these metrics, investors are left to speculate whether Rithm's dividend is supported by underlying cash generation or merely by asset sales or debt management.

Management's Strategy and Forward Outlook

Rithm's management has emphasized its commitment to a "flexible commercial real estate investment strategy," aiming to optimize returns and sustain dividends despite the current headwinds, per the TradingView report. The company's stable book value per share and consistent dividend payout are cited as indicators of resilience, but these metrics do not fully address the declining net interest income or the sharp drop in unrealized gains on mortgage loans reported earlier.

Looking ahead, Rithm's ability to stabilize its earnings will depend on its capacity to restructure its investment portfolio and navigate a high-interest-rate environment. The company's focus on commercial real estate-particularly in sectors with stable cash flows-could provide a buffer, but rising vacancy rates and tenant defaults remain risks.

Risks and Investor Considerations

The primary risk for Rithm lies in its reliance on non-GAAP metrics to justify dividend sustainability. While FFO and AFFO are standard tools for REIT analysis, their absence in Q3 2025 leaves investors without a clear roadmap. Additionally, the company's negative earnings available for distribution suggest that it may need to tap into reserves or issue new equity to maintain payouts, both of which could dilute shareholder value.

Investors should also monitor Rithm's upcoming Q4 2025 results and its year-end asset valuation. A further decline in book value or a shift in management's dividend policy could signal deeper structural issues. For now, the dividend remains a double-edged sword: it offers income but at the cost of financial flexibility in a volatile market.

Conclusion

Rithm Property Trust's Q3 2025 performance highlights the fragility of its dividend amid declining earnings and asset values. While management's confidence in its investment strategy is commendable, the lack of transparency on FFO and AFFO metrics leaves critical questions unanswered. Investors seeking yield should weigh the risks of a strained payout against the potential for recovery in Rithm's core markets. Until more granular cash flow data is available, the dividend's sustainability remains a bet on management's ability to navigate a challenging environment.