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 second quarter 2026 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 would 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 evening, everyone. I would like to thank you for joining us today for Rhythm Property Trust Second Quarter 2026 Earnings Call. Joining me today are Michael Nierenberg, Chief Executive Officer of Rhythm Capital and Rhythm Property Trust, and Nic Santoro, Chief Financial Officer of Rhythm Capital and Rhythm Property Trust. Throughout the call, we're going to reference the earnings supplement that was posted this afternoon 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. 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. So we're going to chat about Rhythm Property Trust. I'll give you my opening comments, then we'll go through the supplement, and then we'll open up for some Q&A. Thanks for joining the call. Since Rhythm took over the management of the contract, which was formerly known as Great Ajax, we've transformed this company pretty dramatically. We changed the name from Great Ajax to Rhythm Property Trust, set out on a mission to actually grow this into a dedicated commercial real estate vehicle. During that time, we have improved liquidity. We've 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've 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've also attempted during the quarter up a couple weeks back to raise equity in the public markets and based on the stock performance at the time, and some of the shorts that were put in the market by the hedge funds, we decided it was in the best interest of shareholders to pull the offering. To grow the company, quite frankly, we'll need to raise capital. In the event we're not able to do so, we'll explore different avenues which could include buying back equity, M&A, as well as tendering for the shares of the underlying company. Our whole goal here is to protect our shareholders figure out ways that we could actually either grow the company, but more importantly, make money for our shareholders. So with that, I'll refer to this supplement, which has been posted online. We'll start on page three. 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've gotten the company from where it was not making any money and actually losing money to where today it's breakeven. And now the path forward has to be where we can grow earnings and grow the capital base. When you think about Rhythm Property Trust, it's managed by an affiliate of Rhythm, which is, quite frankly, us. Rhythm has $9 billion of permanent capital north of $100 billion of assets. It's led by our seasoned team here who have been working together for many, many years at both Rhythm and Rhythm. Going back to the Great Ajax, when we took over Great Ajax. 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. Currently today, we have the origination business at Genesis supplies loans to funds to third-party funds, to different SMAs we have, as well as to the Rhythm Balance Sheet, and now we're doing it with Rhythm Property Trust. These loans are very high-coupon, short-duration senior loans, which we think are great for this vehicle, and hopefully we can figure out a way to raise capital to grow the vehicle. When we look at our dividend yield, we're currently at 10%, and again, we have no legacy commercial real estate exposure, which differentiates us, I think, from the PAC in the commercial real estate space. When you look at Q2 financial highlights, essentially earnings were flat. Book value is $30.17, which is comparable to where it was the quarter before, which I think was $30.33. So overall, flat. Dividend paid is $0.36 for dividend yield at 10%. 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 what our goal is. When we look at page 5, the strategic evolution, I pointed out how 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's breakeven. We've taken actions to position the vehicle for growth. We've sold down the legacy assets that we don't think we can make money on here. And then again, the future state of this is to actually figure out a way to either grow capital or at some point potentially retire the vehicle. Bottom part of the page, you can look at the balance sheet between Q2 of 24 and Q2 of 26. Very, very clean, and I would tell you that we have a world-class investment team managing this vehicle. Page 6 talks about what we've done in Q2. This is just the profile of the assets purchased by Rhythm Property Trust, $117 million of RTL and MTL loans, 9.1% gross WAC, very, very short duration, levered return of about 14%. Could have future funding down the road, so what that effectively means is we're not in any chase to actually replace the assets as they amortize down. Advance rate on the underlying assets are 75%, and the dollar price paid a little bit under 101 with a cost of funds of about 565. So that really is the story here. It's the story of of resetting this vehicle, raising capital so we could actually deploy capital and grow earnings to the extent that we can. We'll have to explore alternative avenues to figure out a way to maximize shareholder value. One of the main reasons we did not do the equity offering was it was substantially below the dollar price where the equity is trading today. So with that, I'll turn it back to the operator. We'll open up for Q&A, and hopefully we can figure out a way to reset the vehicle.