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- **Acquisition-Driven Growth**: $18B AUM Crestline and $7B Paramount acquisitions expand product suite for LPs.
- **Mortgage Dominance**: Newrez delivers 20% ROE with $295M Q3 profit, 32% originations growth.
- **Valuation Catalysts**: Potential 15% Newrez listing and 18% ROE justify $17-18/share revaluation.
- **Capital Allocation**: No dividend hikes; redeploying $1.3B+ cash at 15-20% returns.
- **Risk Management**: Underwriting-first approach avoids ABF fraud risks seen in peers.

**【CEO Summary Section】**
- **Record Quarter Performance**: All business lines (Newrez, Genesis, investment portfolio) delivered strong results, generating $300M in earnings and 18% ROE. Cash and liquidity stood at $2.2B.
- **Strategic Acquisitions**: 
  - **Crestline Capital Management**: $18B AUM, expanding into credit, NAV lending, and insurance/reinsurance. Deal expected to close in December.
  - **Paramount REIT**: $7B office portfolio in NYC and SF, acquired at $600/ft vs. $2,500-3,000/ft replacement cost. 90% leased in NYC, 70% in SF, with potential for NOI growth.
- **Asset Management Growth**: 
  - Genesis Capital originations up 60% YoY to $1.2B, EBITDA expected to reach $120M in 2025.
  - Sculptor Capital raised $4.6B YTD, targeting $5B+ in 2026.
- **Valuation Thesis**: Public company trading at 0.8-0.9x book vs. 1.5-3x peers. Mortgage company alone could justify $17-18/share if spun off.

**【CFO Financial Commentary】**
- **Q3 Financials**: 
  - GAAP net income: $193.7M ($0.35/share)
  - Earnings available for distribution: $297M ($0.54/share)
  - ROE: 11% (GAAP), 18% (non-GAAP)
- **Liquidity Post-Acquisitions**: 
  - $1.3B cash post-Crestline/Paramount closings
  - $1B available via financing facilities
  - No equity raises planned for acquisitions
- **Balance Sheet Strength**: $47B total assets, $8.5B permanent capital

**【Mortgage Company Update】**
- **Newrez Performance**: 
  - Q3 pretax income (excl. MTM): $295M (20% YoY growth)
  - ROE: 20%
  - Direct originations up 32% YoY
  - Non-agency production up 120% YoY
- **Margin Management**: 
  - Weighted average margin: 114bps (down due to gov't streamline refinances)
  - Servicing income: $260M (11% YoY growth)
- **Technology Edge**: 
  - ReziAI platform costs $140/loan
  - 100,000+ monthly loan applications
  - New tools like ReziAssist automate 60% of loan officer calls

**【Q&A Highlights】**
- **Strategic Priorities**: 
  - Focus on asset management growth (ABF funds, direct lending)
  - Potential partial listing of Newrez (15% stake) to test market
  - No dividend increases; redeploying capital at 15-20% ROE
- **Paramount Capital Raise**: 
  - $300-500M from Rithm, $950M+ from third parties
  - Conversations with 5-10 LPs/day
- **Underwriting Risk**: 
  - ABF funds focus on underwriting first (non-QM, RTL)
  - Avoiding systemic risks seen in First Brands/Tricolor
- **RPT Strategy**: 
  - Explore direct lending opportunities
  - Tender offer if growth unachievable

Rithm Capital Corp. (RITM) Q3 2025 Earnings Call Transcript

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RITM

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