Rithm Property Trust Inc.(RPT)Q2 2026 法說會逐字稿

Thank you for standing by. At this time, I would like to welcome everyone to the Rithm Property Trust Second Quarter 2026 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. If you would like to withdraw your question, press 1 again. Thank you. I would now like to turn the call over to Emma Bolla, Deputy General Counsel. You may begin.

Thank you, and good evening, everyone. I would like to thank you for joining us today for the Rithm Property Trust Second Quarter 2026 Earnings Call. Joining me today are Michael Nierenberg, Chief Executive Officer of Rithm Capital and Rithm Property Trust, and Nick Santoro, Chief Financial Officer of Rithm Capital and Rithm Property Trust. Throughout the call, we are going to reference the earnings supplement that was posted this afternoon to the Rithm Property Trust website, www.rithmpropertytrust.com. If you have not already done so, I would encourage you to download the presentation now. I would like to point out that certain statements made today will 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 earnings 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 our earnings supplement. With that, I will turn the call over to Michael.

Good evening, everyone. We are going to discuss Rithm Property Trust. I will give my opening comments, we'll go through the supplement, and then we'll open for some Q&A. Thanks for joining the call. Since Rithm took over the management of the company, which was formerly known as Great Ajax, we have transformed this company pretty dramatically. We changed the name from Great Ajax to Rithm Property Trust and set out an ambition to actually grow this into a dedicated commercial real estate vehicle. During that time, we have improved liquidity. We have cleaned up the balance sheet. We grew earnings so the company no longer loses money. During the quarter, in Q2 and subsequent to Q2, we have invested in multifamily transitional loans, which have been originated by our affiliate Genesis Capital with the intent to grow earnings and transform the business further. We attempted during the quarter, a few weeks back, to raise equity in the public markets. Based on the stock performance at the time and some short selling activity, we decided it was in the best interest of shareholders to pull the offering. To grow the company, we will need to raise capital. In the event we are not able to do so, we will explore different avenues which could include buying back equity, M&A, or tendering for the shares of the company. Our whole goal is to protect our shareholders and figure out ways that we could actually either grow the company, but more importantly, make money for our shareholders. With that, I will refer to the supplement, which has been posted online. We will start on page 3. We have a few short pages, but I think the real story is here: we have a very, very clean balance sheet, which is very different than a lot of mortgage REITs out there. We have gotten the company from where it was not making any money and actually losing money to where today it is breakeven. Now the path forward has to be where we can grow earnings and grow the capital base. When you think about Rithm Property Trust, it is managed by an affiliate of Rithm, which is, quite frankly, us. Rithm has $9 billion of permanent capital and manages north of $100 billion of assets. It is led by our seasoned team here who have been working together for many, many years, both at Rithm and going back to Great Ajax when we took over. When we look at the pipeline, we have a world-class origination business in Genesis Capital that makes these residential transition loans as well as multifamily transition loans. Today, the origination business at Genesis supplies loans to funds, to third-party funds, to different SMAs we have, as well as to the Rithm balance sheet, and now we are doing it with Rithm Property Trust. These loans are very high coupon, short duration, senior loans, which we think are great for the vehicle, and, hopefully, we can figure out a way to raise capital to grow the vehicle. When we look at our dividend yield, we are currently at 10%. We have no legacy commercial real estate exposure, which differentiates us from much of the commercial real estate space. Looking at Q2 financial highlights, earnings were essentially flat. Book value is $30.17, which compares to $30.33 in the prior quarter — so overall, flat. Dividend paid is $0.36, which represents a dividend yield of 10%. Our priorities: how do we unlock shareholder value? How do we create real value out of this vehicle? How do we reset the vehicle? That is truly our goal. On page 5, the strategic evolution: we took over the management contract from Great Ajax. We took it from where it was losing a little under $10 million on a quarterly basis to where it is breakeven. We have taken actions to position the vehicle for growth. We have sold down legacy assets that we do not think we can make money on here. The future state is to figure out a way to either grow capital and potentially retire the vehicle. On the bottom part of the page, you can look at the balance sheet between Q2 2024 and Q2 2026 — very, very clean. We have a world-class investment team managing this vehicle. Page 6 talks about what we have done in Q2. This is the profile of the assets purchased by Rithm Property Trust: $117 million of residential transition loans (RTL) and multifamily transition loans (MTL), 9.1% gross WAC, very short duration, levered return of about 14% to future funding down the road. What that effectively means is we are not in any rush to replace the assets as they amortize down. Advance rate on the underlying assets is 75%, and the dollar price paid was a little under 101 with a cost of funds of about 5.65%. So that really is the story here: resetting this vehicle, raising capital so we can actually deploy capital and grow earnings. To the extent that we can, we will explore alternative avenues to maximize shareholder value. One of the main reasons we did not do the equity offering was that pricing would have been substantially below the dollar price where the equity is trading. With that, I will turn it back to the operator. We will open up for Q&A and hopefully we can figure out a way to reset the vehicle.

At this time, I would like to remind everyone in order to ask a question, press * on your telephone keypad. Your first question comes from Tom Catherwood with BTIG. Please go ahead.

Thanks, and good afternoon, Michael. Just wanted to touch on — you added on Slide 5, the future state you added this comment about 'explore opportunities to enhance shareholder value,' which is different wording than you've used in the past. What exactly does that entail? And why not follow Apollo and KKR in their CME vehicles and conduct a formal strategic review?

Here's what I would say. Apollo's vehicle is different — it was a much larger capital base, and the direction of that organization is different, so I cannot speak for their leadership team. We are still in a position where we would like to reset or grow this vehicle. As we look at KKR, that vehicle was definitely not as clean as ours. Our whole goal is how do we create real shareholder value. We took over this company. Book value is substantially higher than where the equity is trading. That being said, this will be a board decision as to the direction of what we do here: whether this thing gets cleaned up, whether we tender for shares, whether we pursue M&A deals, etc. When we did this initially, we intended to try to grow the vehicle. Clearly, we have not been able to do that, as illustrated by the recent attempt to raise equity. There is no lack of effort on our part. So it will be a board decision. In the meantime, if we can raise some equity, that would be great. If not, we will go back to the board and figure out the best way to clean this thing up.

Got it. Appreciate it. Maybe sticking on that whole concept of growing the vehicle, we're trying to figure out how much more investment capacity the balance sheet can support. I think you have $111 million of future funding for the Genesis loans that you took on this quarter, which at a 75% advance rate is roughly $28 million of equity. What is the minimum cash balance you are comfortable carrying? And how much equity is left in the $84 million of CMBS loans that could be redeployed into these Genesis loans?

There is something north of $50 million, I believe, in equity that remains in the vehicle. We could, quite frankly, do a preferred issuance if we wanted to, or another debt deal. We're not constrained to one path. These loans pay down and turn over, so we feel there is enough liquidity in the vehicle today to take care of any potential draws we may see over the next couple of years.

Alright. So if it is $50 million of equity, $28 million is already committed to that $111 million, which leaves you with about $22 million. Is that $50 million after the deployment of the $20-odd million of the loans that I believe funded today? So with that, and using the same 75% advance rate that you used to take the loans this past quarter, you could take down another $200 million of loans from Genesis. Is that the near-term plan? Are you holding that liquidity or something else?

Yes, we'll keep more liquidity. We might deploy a little bit more capital into loans to try to grow earnings. But the net of it is if we cannot raise equity or capital in the near term, we will go back to the board and we'll have to make a board decision to do something different.

Got it. Appreciate the answers. Thanks, Michael.

Thank you.

Your next question comes from the line of Craig Kucera with Lucid Capital Markets. Please go ahead.

You mentioned in the deck that you are looking to sell some subordinate positions in several securitizations. Can you give us a sense of how much capital that might free up?

We have sold everything that we can. We have to hold on to a number of retained interests for purposes of Dodd-Frank. There is some stuff that we could potentially call and then liquidate, which would create a little bit of a loss. For now, assume whatever has been able to be sold from the legacy side has been sold. I think the total equity remaining on the residential side, Nick can correct me if I'm wrong, is roughly about $100 million after the last transaction. Most of the remaining positions are retained interests that we must hold because they were securitized years ago; the coupons are low and they are not in the money to be called today. Some of them come up this fall based on timing and factors, and we will have another hard look at those. For now, assume they sit there until we decide otherwise.

Got it. Changing gears, given the highly accretive nature of the residential and multifamily transition loans, was there any thought to sell an ownership in Paramount back to Rithm to deploy more of a higher current-yielding product? Or do you feel that investing in Paramount is best for the vehicle?

We did that when we thought we were going to be able to raise capital for the vehicle. We were excited about the Paramount/Sculptor investment. That alone may not get us over the hump because we still need to raise capital. The challenge of raising equity — this is our second attempt in the last six months — is that when you go out with a potential equity offering, the stock tends to get hit. We started when the stock was at about $14 and a deal would have had to be south of $10. Even with Rithm prepared to backstop it, that would not have been a good solution for Rithm Property Trust shareholders. There is the $50 million that sits there and we can deploy a bit more capital, but unless we raise equity, we will go back to the board and make a recommendation. It will be a board decision. The vehicle will be cleaned up one way or another.

You mentioned Rithm was willing to put $200 million in as a backstop, a mix of common and convertible preferred. Is some capital raise similar to that a possibility, or would you need more market participation?

We have ample resources. If you looked at Rithm's liquidity as of June 30, we had $2.1 billion of cash and liquidity. It's more about where the equity comes from. We're extremely sensitive about issuing equity at a deep discount to the trading level — issuing at $9 when the stock was $14, then seeing the stock pop a few dollars, does not work for shareholders. That is not who we are.

Okay. Thanks. That is it for me.

Thank you.

Your next question comes from the line of Henry Coffey with Wedbush Securities. Please go ahead.

Good afternoon, everyone. Mike, it seems however hard we push you on the idea of putting on more assets, the answer is no: you are not going to ramp up leverage beyond anything that is reasonable. You need more capital, and that could come in a lot of different forms; we all know that. So a couple of questions: a) How quickly would you move on one front or the other? And b) What does the final clock look like in terms of how you are thinking about this business — whether it should be acquired and folded back into Rithm, whether you should tender for the stock, or however you want to ultimately resolve the thing?

It is kind of like two paths: a) you get some form of capital into the vehicle, or b) you take it private. I think it's a 2026 event. We begin August here and will continue to work with our board. To the extent we can bring in a sleeve of capital, great. If not, we will consider alternatives. I would assume this will be resolved in 2026.

Alright. Thank you.

Thank you, Henry.

Your next question comes from the line of Jason Stewart with Compass Point. Please go ahead.

Thank you. Michael, you started to address part of my question, which is how would a future array look different? Is there a way to structurally address perceived market concerns, like a wrap or a backstop? I think you started to address that with Rithm as a backstop. Is there any other option on the table that you are considering in terms of structural enhancement?

If you have an idea, call me. We've tried bringing in third-party capital alongside this. We've worked through backstop options. The equity is fundamentally extremely cheap, and one of the challenges is there is not a large float. Trading volume is higher these days, but with a stated book value of about $30, we need to reset the vehicle — but you don't want to reset with $2.5 billion in assets if you won't solve the underlying issues. The initial idea was a reasonably sized offering with Rithm participating because we believe in it. But we need real participation from others beyond Rithm. We've had many conversations; some participation exists, but it's a question of where the equity comes from.

From the beginning, we've talked about the potential for a transformative commercial real estate transaction, outside of the Genesis book. Is it your feeling now that there is too much capital chasing those opportunities, and that such a deal is unlikely? Or based on deal flow you see, is it still possible?

We are doing different debt deals. If you look at the Rithm earnings call earlier today, and some of the monetizations we have done, we've put out a couple hundred million off-Rithm that have generated very good returns on both debt and equity. We are hunting across asset classes; it doesn't have to be office. We're looking at public company opportunities and private company opportunities. The runway in the Genesis business alone gives us plenty of ability to create mid-teens levered assets with real cash flow that we could potentially fund in Rithm Property Trust. Some of that business goes into funds now and some sits on balance sheet, but that is what we are working toward. Banks are back in lending, which is healthy for the market, and there are opportunities. We work with our broker friends and see many different opportunities. We have to figure out what is right for the vehicle.

Okay. Thank you.

Thanks, Jason.

There are no further questions at this time. I will now turn the call back over to Michael Nierenberg for closing remarks.

I appreciate everybody's thoughtful questions. If you have any good ideas that we are not thinking about, give us a buzz and we are always happy to listen. We want to protect our shareholders and not do a deal that does not make sense. To the extent we can get a deal done, we will. If not, we will try to figure out plan B. Our intent is to have all of that resolved by the end of the year, no later than the end of the year. With that said, have a great rest of the summer and appreciate your thoughtful questions. Take care. Bye.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.