Rithm Property Trust Inc. Common stock

Thank you for standing by. At this time, I would like to welcome everyone to the Rhythm Property Trust fourth quarter 2025 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to Emma Holke, Deputy General Counsel. You may begin.

Thank you and good morning, everyone. I would like to thank you for joining us today for Rhythm Property Trust's fourth quarter and full year 2025 earnings call. Joining me today are Michael Nirenberg, Chief Executive Officer of Rhythm Capital and Rhythm Property Trust, and Nick Santoro, Chief Financial Officer of Rhythm Capital and Rhythm Property Trust. Throughout the call, we are going to reference the earnings supplement that was posted this morning to the Rhythm Property Trust website, www.rhythmpropertytrust.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, including any statements regarding illustrative portfolios or earnings. 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 and happy Friday the 13th. Thanks for joining us on Rhythm Property Trust, our fourth quarter earnings call. Just a few things. While investment activity remained light away from a small investment that Rhythm Property Trust made in the Paramount transaction that our parent Rhythm announced in December, the balance sheet, cash, the company remains in great shape. During the fourth quarter, we also announced a reverse split of our shares on a six to one So when you look at it today, obviously, you know, with the stock trading, something between $15 and $16 versus where it was, you know, I think with something around $2, right? You know, we feel like it's going to hopefully attract more interest in the stock with a higher, obviously a higher share price, recognizing that we did do a reverse split. As many of you know, and we've said this repeatedly, we took over the management contract of what was formerly known as Great Ajax in June of 2024 with the intent of making it a dedicated commercial real estate vehicle as well as an opportunistic investment vehicle. What we did then is we repositioned the company, we cleaned up the balance sheet, we raised capital, And today we remain focused on what I would say is a potential recap of the company along with earnings and dividend growth. We have a clear path, which depends on capital formation to be clear, to take the company from flat earnings to a future state where the company is earning something between $1.60 and $1.70 per share and trades give or take about a 9% dividend yield with a book value of approximately $20. That all depends on, one, the recap, and two, where you actually raise the capital. The plan for the vehicle would be to acquire multifamily loans from our operating business, Genesis, which we have already identified that pool of loans, along with other commercial real estate investments, so there will be no J curve as we think about earnings growth and where we're going with the vehicle. Today, as we know, many REITs, BDCs, and other capital vehicles are not trading well. And while we will be patient, we hope to accomplish this when the markets stabilize. I'll now refer to the supplement which we have posted online, and I'm going to begin on page three. So when you look at the company today, obviously there's a pretty active investment pipeline. The company today sits with give or take about $100 million of cash in liquidity. Total equity in the vehicle is $300 million. And when you look at our trading price, which I think is something around $15, the company is trading at roughly, give or take something around 50% a book. When we look at the vehicle, it is externally managed by Rhythm. So when you look across the firm, we have a ton of real estate investment professionals and others which are here to support the vehicle and support the growth. As you all know, we've done this before when we started new residential back at Fortress in 2013, and we hope to achieve the same level of growth and success from an earnings perspective and a growth perspective in this vehicle as we go forward. When you look at financial highlights, you know, earnings were flat. We took over this thing, as I pointed out, in June of 24. where the company wasn't making any money. You look at Q4, gap earnings $2.5 million. EAD is kind of $500,000 to the negative, which leads to a per diluted share of $0.06 negative. Book value, as we pointed out, was about $300 million or $31 per diluted share. Common stock dividend that we pay, we're going to continue to pay that dividend as 8.7 from a dividend yield perspective. And then, as I pointed out, cash and liquidity is give or take about $100 million. Really, the whole play here is you have a clean balance sheet, you have a clean company, you have a dislocated sector in the real estate space, you have many commercial REITs which are underwater because they have either liquidity issues or they have a balance sheet that continues to need to get cleaned up. For us, we're going to be patient. We're not going to keep this vehicle outstanding forever. But while saying that, having a clean vehicle where we want to recap this, similar to what Blackstone did around BXMT with Cap Trust, I think it was, that is our ultimate goal here as we look to grow the vehicle. And it's not just about growth. It's, you know, how do we make our shareholders money? We do think that this and some of, you know, a lot of the capital vehicles, including Rhythm and RPT, are trading at extremely low valuations. So hopefully they write themselves, but as we think about this vehicle, we will be patient. We are sitting on cash and liquidity. We do want to do a recap, and we think from an opportunistic standpoint, we have the assets that will now take this business to grow earnings to something between $1.60 and $1.70 per share, assuming that we do a recap of the vehicle. When you look at the portfolio on page six, You know, what are we going to do with it? We speak about multifamily loans or Genesis business, which we bought from Goldman in 2022. At that time, they were doing a billion seven of production. You know, this year, I think we're projecting we're going to do something between six and seven billion of production. We're going to be growing our multifamily lending business. We are seeing some potential opportunities in that space, even around acquiring licenses to become a Fannie Freddie servicer or originator in the multifamily space. So that's something that we're currently working on. Obviously, we're making a big push in the commercial real estate space. We announced the acquisition of Paramount. We love that transaction. It'll take a little bit of time, but we're really excited about where we sit there, our entry level, our basis, and where we're going to go with that company. And then when we think about opportunistic investments, we've been very good at adding identifying them and acquiring them through the course of our careers, but taking the company back to 2013 on the new residential slash rhythm level. When you look at page seven, we talk about our ability to source, whether it be at the rhythm parent level, whether it be at Genesis, whether it be at Paramount. Obviously, we announced the closing of Crestline, in uh in december and then along with our partners at sculptor we have a lot of opportunity to uh to source product looking ahead at the opportunity on page eight you know commercial real estate um we love the office story i know there's you know yesterday obviously with uh with you know the ai story a lot of the commercial real estate uh reits got hit The one thing I want to point out from a company perspective, both at the Rhythm level and at RPT, we have a very diversified business. If you look at Rhythm's earnings in the fourth quarter, we produced north of $400 million in earnings available for distribution. We have certain things that performed extremely well, other things where we had, for example, higher amortization in our mortgage company. But net-net, when you look at that business and you look at – or diversified earning streams, whether it be at Rhythm, Rhythm Property Trust, we're very good at, in my opinion, at creating diversified earning streams that if one lever is not working great, another level will work great. So when you look, when we look at the opportunity here for RPT, obviously commercial real estate, we like a lot. There will be other things in the opportunistic space. that we think are going to be highly accretive to what we're going to do in this vehicle as well, and we look forward to executing around that. So with that, I'll turn it back to the operator. We'll open up for some Q&A.