Rithm Capital Corp.

Good morning and welcome to the Rhythm Capital fourth quarter 2025 conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star and then one on your touch-tone telephone. To withdraw your questions, you may press star and two. Please also note today's event is being recorded. At this time, I'd like to turn the floor over to Emma Holke, Deputy General Counsel. Ma'am, please go ahead.

Thank you, and good morning, everyone. I would like to thank you for joining us today for Rhythm Capital's fourth quarter and full year 2025 earnings call. Joining me today are Michael Nirenberg, Chairman, CEO, and President of Rhythm Capital, Nick Santoro, Chief Financial Officer of Rhythm Capital, and Barron Silverstein, President of Neurose. Throughout the call, we are going to reference the earnings supplement that was posted this morning to the Rhythm Capital website, www.rhythmcap.com. If you've not already done so, I'd 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.

Thanks, Emma. Good morning, everyone, and thanks for joining our fourth quarter earnings call. So much to be excited about with our company. And before I get into the discussion, I want to thank our partners for all your support, as well as our employees across all of our companies for all of your hard work and effort in driving excellent results for our LPs and shareholders. On today's call, I welcome Peter Brinley, one of our new partners who has been leading all leasing and other divisions at Paramount. Peter will be speaking about Paramount, which is one of our new acquisitions on the real estate side, and Barron Silverstein, who you've heard from in the past, will be speaking about New Res. As we think about 2025, it was an excellent year for the company, in which we executed for our clients by creating outsized returns for our LPs and higher earnings year over year for our shareholders. We grew our asset management business both organically as well as through acquisition, including adding Crestline Asset Management and the take private, as I just pointed out, of the real estate re-name Paramount to our stable of companies. Today, we manage over $100 billion in investable assets across the firms. As I've said repeatedly, we will grow our firm prudently by creating alpha and results for our clients. While all of us in the asset management business want more assets, we will earn each and every one through performance. Financially, our company had a great year, a great fourth quarter, which I'll get into in our supplement. The diversification of our platform is paying off, as we had a record fourth quarter from an EAD perspective. Book value year over year was higher, despite paying out north of $600 million in dividends. Our Genesis business, which manufactures and originates multifamily loans and residential transitional loans, had a record year, both in originations as well as in earnings. This business produced just under $5 billion in loans, and earnings were up 250% from the time we acquired the company in 2022. Just for our metric, when we acquired the company in 2022, production numbers were $1.7 billion. This year, we'll cross north of $5 billion while maintaining prudent discipline around credit. Our mortgage company, New Res, had a great year. Year-over-year earnings grew by 13%. We continue to make significant investments in our tech stack as well as our marketing division as we work on our customer experience and our brand. During the year, we welcomed two new leaders to these divisions, Brian Woodring, who joined us from Rocket, and Leslie Gillen, who joined us from JP Morgan, both experienced leaders in their field. We announced two transformative transactions on the tech side. One is Valen, which we announced this past week, which is a world-class servicing system, and Barron will speak to that, and HomeVision on the origination side. In our asset management division, we had a very good year. As I mentioned, we announced the acquisition of Crestline, which is a terrific credit shop with both an insurance and reinsurance business. Sculpta had a great year, both on the performance side as well as on the capital formation side, with assets growing, especially the real estate division, which closed on a $4.6 billion new fund. On the asset management side, we launched our first ever green fund on a bank platform in the ABF space. We created SMAs on our origination business with overseas clients. We launched our first closed-end ABF fund with an initial seed from a pension of $200 million. While we are very pleased with our progress, there is so much more for us to do. On the Paramount acquisition, what that deal is, it was an opportunistic situation. We acquired 13 large office buildings in both New York and San Francisco, of which roughly 10 are core. It's a real highlight for us. Not only do we love the basis for entry, we now have a great operating company which will help create an edge for us as we look for other opportunistic investments in the real estate space. Looking forward, we will add to the platform where we need to offer products for our LPs and shareholders. I'll now refer to the supplement which has been posted online. I'm going to start on page three. As you look at page three, Again, as I mentioned, we have over $100 billion in assets being managed by the firm that's both balance sheet as well as with third-party clients. The Rhythm Asset Management AUM is $63 billion. The Rhythm Balance Sheet business is $53 billion. When you look at our family of companies, Sculptor, world-class asset management business providing credit, real estate, and multi-strat investing, Crestline, Large credit shop offering a vast array of credit offerings. Paramount, as I mentioned, which is the real estate company that Peter will be speaking to in a minute. And just on a side note, at some point the Paramount name will go away because obviously it's a little bit confusing between movie studios and other things. So we are currently working on a rebrand there. New Res, our mortgage company. Third largest servicer of mortgages in the United States and the fifth largest mortgage lender in the United States. And then Genesis, which is one of the largest residential transitional lenders in the U.S. and probably one of the hottest products when we think about from a fund formation that our clients want. As I mentioned before, we're going to earn, we're going to grow via results, and that's the way that this company was built, and that's the way that we're going to continue to maintain discipline as we go forward. Page four, financial highlights, earnings. for 2025 earnings available for distribution $2.35 per diluted share, which represents a 12% year-over-year growth. We had an amazing quarter in Q4, which actually shows the diversification of our platform, earning $0.74 per diluted share. Stable earnings performance when we look for the company. We've earned 25 consecutive quarters where our earnings available for distribution were greater than the common dividend paid. Dividends, we paid out well north at $6 billion in dividends since we formed the company in 2013 while at Fortress. When you look at Q4 results, gap net income $53 million, $0.09 per diluted share. For the quarter, 3% return on equity. When you look at EAD for Q4, $419 million in the quarter, 74 cents per diluted share, or 24% return on equity. When we look back to 2025 Gatnet income for the year, $567 million. Obviously, the delta between Q4 and fiscal year 2025, has to do with the MSR mark that we took in the quarter to be a little bit more conservative, and Barron will speak to that in a minute. For fiscal year 2025, from a GAAP perspective, $1.04, and a return on equity from a GAAP perspective, 8%. When you look for the full year, earnings available for distribution, when you take out the noise, the company made a little under $1.3 billion, $2.35 per diluted share, and a return in equity for the entire business of 19%. Book value reported at the end of 12-31 was $7 billion, which represented a $12.66 per common share. When you look back, I think the year before, it was about 10 cents lower. When you look at where we are market-wise, the 10-year Treasury is backed up in yield towards 430. Mortgage rates on the other side have dropped a little bit. Book value today is probably between 12.75 and $13. Our common stock dividend, we traded roughly 9.2%. This was at the end of the year. And as everybody knows, we pay out 25 cents a quarter or on a fiscal year basis, a dollar a share. Cash and liquidity, this is after balance sheeting. The paramount deal on balance sheet is we work to raise capital around that, both in a JV structure as well as in funds. We ended the year with $1.7 billion of cash and liquidity on balance sheet after funding everything in the business. Page five, year in review. As I pointed out, on the asset management side, a very, very good year. Sculptor had gross inflows of $5.8 billion in 2025. AUM grew from $34 to $38 billion in the year. On the rhythm side, we closed different ABF products, as I mentioned. First ever green fund. And we're out now marketing a closed NABF fund with an initial seed of $200 million. On the Crestline acquisition, this kind of fulfills our mission of what we think on the credit side. And I'll talk to this in a minute. But Crestline is a little bit under $20 billion in AUM. They have a ton of different LPs. They had their annual meeting last week down in Texas. I was down there meeting with a lot of clients and And everybody's super excited. One is about the partnership as we go forward, but also what some of the pockets that we didn't have before that we currently acquire as a result of the Crestline organization. And more importantly, the people there are just terrific. So we're really excited about where we're going to go there. I mentioned Paramount. And again, Peter's going to talk to that. Class A office buildings in New York and San Francisco. Super pumped about that one. As many of you know, we at the rhythm level, not at the sculptor level, have avoided, not avoided, I should say, but have not made commercial real estate a primary focus. This acquisition obviously puts us where we're the fourth largest owner of office here in New York City, and we're super pumped about that. When you look to the bottom part of the page on the left side, Genesis Capital, I pointed out that the team there has done a great job. $4.8 billion of origination in 25, record earnings, client franchise continues to expand, and we are going to lead with credit first. That is our mantra as we think about our origination businesses. New Res, I pointed out, third largest mortgage servicer in the U.S. That does include the large banks. Fifth largest mortgage lender in the U.S., Servicing portfolio, $850 billion. Funded volume for 2023, 2025, $63 billion. Generated north of $1 billion in pre-tax income. Year-over-year is up 13%. And then we announced our strategic relationships or partnerships, including some equity investments on the technology side. On the investment portfolio side, we did eight securitizations, $4 billion in UPB. We invested $9 billion in residential mortgage assets. A lot of that's through our origination businesses between non-QM, which grew a lot in the New Res side, and our residential transition loan business, which, again, is the Genesis business. And we also entered into a floor agreement with Upgrade to purchase up to $1 billion of home improvement loans. And then we purchased a little bit under $600 million in 2025. From a macro standpoint, obviously a lot of geopolitical risk everywhere in the system. The administration is extremely focused on affordability. They announced, you know, the GSEs are going to purchase up to $200 billion of agency MBS. We are not sure exactly what that amount is today. For 2026, we think they could buy upwards of $155 billion. While saying that, we think a significant amount could have already been purchased. What we did see in the quarter is the mortgage basis tightened, which means you're seeing lower mortgage rates relative to where treasury yields are. As a result of that, we should see more mortgage production. You are going to see higher levels of amortization. The higher levels of amortization should provide an opportunity for us to generate more origination gains. As we look forward, we believe the yield curve will continue to steepen. I've been pretty vocal on a number of our earnings calls We are set up for this. We are long the front end, and we're not really short much, but if we're short anything, we would be short the back end. We do think the yield curve will continue to steepen. Obviously, President Trump announced Kevin Warsh as the new Fed chair, and we think that'll continue again to lead to a steepening yield curve. The last part I'll mention on this page as we think about this agency, MBS has done extremely well the past towards the end of the year. And the other space that's actually really in vogue and obviously we made a significant investment there is on the return to office or the office buildings that we have. And again, Peter will speak to that. As we look at the Power of the Platform, page eight, you know, the asset management business will continue to grow. We don't, just to be clear, we don't really need anything. When you look at this page, there are certain pockets that we don't have. We will, you know, for example, as we think about infrastructure, where we will grow, our thing and my thing has always been we're not going to grow in a sector unless we have the expertise around the house. I always like to use the example is you can't take the shortstop and make him or her an offensive lineman. That just doesn't work. When we look at our business today, we have a great credit business. We have a great multi-strat business. We have a great real estate business, and our ABF business should grow substantially over time. But again, we're going to grow through our existing teams, and we have great teams. I think in the asset management business, when you look all in, we have about 700 folks across the platform. That includes both investment professionals as well as support teams. So we're extremely well-staffed and well-suited for the growth in our company. But again, we do need to lead with results first. Page 9, Scope, they had a great year. I pointed out $5.8 billion in gross inflows, performance across the board, whether it be in the multi-strat fund, which is roughly $9 billion now, $15.5 gross, or 11% net in 25. The credit fund through 25, and this goes back in time, $18.9 gross and $14.5 net. Asset management revenues in 25, up $95 million from 24. Again, we have everything we need in credit. We think we have everything we need in real estate. We'll grow in areas that we don't have either the staff or the, what I would say, the wherewithal to grow unless we think we're going to create an edge or be a market leader. When you look at the scoped organization, 30-year track record, greater than 70% of the clients have been with the firm for longer than a decade, and AUM is now approaching $40 billion. Crestline closed that transaction in December. I'm on page 10. $18 billion total AUM, 700 investors across all strategies. The business has been in place for 20 years. Keith Williams, who leads the asset management business, has done a great job there, continuing to grow. Offices in New York, Canada, London, Tokyo, and couple that with our Sculptor partners. Again, we have everything we need to continue growing and providing good value for our clients. When you look at 25, the capital solutions business, Overall, since 22, generated a little bit south of 15% from a net IRR perspective. Direct lending, it's a little under 13% since 23. And the NAV lending business, 11%. A great brand. And again, where, you know, I think the merits or why this deal works is we bring capital You know, when you look at the broader organization, there were things that we didn't have that today we have. For example, direct lending, ABDC, insurance, reinsurance, and capital solutions. So when you think about the credit business across both Sculptor and Crestline today, I think it's something north of $40 billion. So super pumped about that. On the Paramount deal, page 12, when we look at Paramount, you know, how do we think about this? So what I would say is when we started with Rhythm, which was formerly known as New Residential in 2013, our thesis back then was to take advantage of a dislocation in an asset class and build a company around that. At that time, the asset class that we focused on were mortgage servicing rights. So we seeded New Residential at that time with a billion dollars. We went out and bought hundreds and hundreds of billions of mortgage servicing rights from the banks. And from there, that was really the beginning of New Residential. When we look at the Paramount Group, and this, again, there'll be a name change there, so it's not confusing. But when we look at this company and you think about the dislocation in office and our ability or what we have at Rhythm, which is no legacy office and a very, very clean balance sheet, we thought this would be the right time and the right asset class and the right team to be able to take advantage of a dislocated sector. So again, what did we do? We went out, we bought a company in competition with some of the largest office REITs here in the US as well as some foreign investors. We bought a company where the going in cap rate is 7%. Our acquisition basis is $585 a square foot. We're buying Class A office buildings in two gateway cities at a 40% discount to pre-COVID values. And you just can't build these buildings, and the replacement cost is a 75% discount to replacement cost. One of the things that we get, and I'm going to turn over the narrative to Peter here in one second. One question we typically get when we're out there raising capital around this particular transaction is, well, who's the leadership? Paramount has 300 people, both at the building level and at corporate. When we spend time and when I spend time with Peter and you look at the expertise we have in-house at Rhythm and our operating companies, there's a world-class operating company here at Paramount. We don't need anything else when we think about how this company is going to run. Obviously, we're tweaking leadership and we have done that. When we look at the team today, we're super excited about where we're going to go with this company. where we're gonna be able to add in the office space, and quite frankly, where we're gonna add overall as an organization in the real estate space. So, super pumped about this. We do think it's transformational for us in the commercial real estate space. With that, I'm gonna turn it over to Peter, who's gonna take over on page 13.