On April 25, 2025, Rithm Capital Corp (RITM, Financial) released its 8-K filing for the first quarter ended March 31, 2025. Rithm Capital Corp operates as a real estate investment trust (REIT) providing capital and services to the real estate and financial services industries. The company aims to generate attractive risk-adjusted returns through a diversified portfolio of investments and operating businesses, including mortgage servicing-related assets, residential securities, loans, and consumer loans.
Performance Overview
Rithm Capital Corp reported a GAAP net income of $36.5 million, or $0.07 per diluted common share, which fell short of the analyst estimate of $0.35 per share. However, the company reported earnings available for distribution of $275.3 million, or $0.52 per diluted common share, surpassing the estimated earnings per share. Revenue for the quarter was $768.4 million, exceeding the analyst estimate of $515.42 million.
Financial Achievements and Challenges
Rithm Capital Corp's financial achievements include completing a $878 million secured financing backed by mortgage servicing rights (MSRs), marking the largest-ever MSR debt issuance. The company also completed two non-qualified mortgage securitizations totaling $634 million in unpaid principal balance and sponsored a $230 million initial public offering of Rithm Acquisition Corp. Despite these achievements, the company faced challenges with a decrease in GAAP net income from the previous quarter's $263.2 million, or $0.50 per diluted share.
Key Financial Metrics
Rithm Capital Corp's book value per common share was reported at $12.39. The company declared a common dividend of $132.5 million, or $0.25 per common share, consistent with the previous quarter. The company's total assets stood at $45.33 billion, with total liabilities of $37.19 billion, resulting in total equity of $7.88 billion.
Segment Performance
Newrez, Rithm Capital's mortgage origination and servicing platform, posted a pre-tax income of $270.1 million, excluding MSR mark-to-market loss and related hedge impact. The platform achieved a 19% pre-tax return on equity on $5.5 billion of equity. Genesis Capital, the residential transitional lending platform, recorded a pre-tax income of $22.4 million, with origination volume reaching a record $895 million for any first quarter.
Commentary and Outlook
“Rithm delivered strong performance in the first quarter despite a challenging macroeconomic environment, demonstrating the power of our diversified platform,” said Michael Nierenberg, Chief Executive Officer and President of Rithm. “The quarter was marked by several achievements that reinforced the strength of our innovative approach, including the largest-ever mortgage servicing rights debt issuance.”
Analysis
Rithm Capital Corp's performance in Q1 2025 highlights the company's ability to navigate a challenging economic environment through its diversified investment strategy. While the GAAP net income fell short of expectations, the company's earnings available for distribution and revenue exceeded estimates, showcasing the strength of its core operations. The company's strategic initiatives, such as the MSR debt issuance and mortgage securitizations, position it well for future growth and value creation for shareholders.
Explore the complete 8-K earnings release (here) from Rithm Capital Corp for further details.
