REIT turns a profit in Q4 2022 despite weaker origination business
Rithm Capital, the parent company of wholesale lenders Newrez and Caliber Home Loans, experienced a profitable 2022, despite losses in its origination segment.
The real estate investment trust generated a net income of $864.8 million ($1.80 per share) in its full-year 2022 financial report. Of this total figure, Rithm gained $103.3 million of net income from its lending and servicing business in the fourth quarter, a 24.8% decline from the third quarter.
Its origination unit, largely under Newrez, posted a $49.1 million loss in Q4. Newrez financed $7.9 billion of home loans during the quarter, down 42.8% sequentially. The REIT’s MSR portfolio was also down from $615 billion in Q3 to $609 billion in Q4. On the non-QM side, Rithm closed one non-QM securitization representing $262 million UPB of collateral.
“2022 was a transformational year for our company, highlighted by our transition from New Residential to Rithm,” said Michael Nierenberg, chairman and CEO of Rithm Capital. “We delivered on our message of preparing our business for a higher rate environment by not fighting the Fed and by being defensive with our capital deployment. This past year, in a very challenging and volatile market environment, we produced a 15% GAAP (or 11% EAD) return on equity, grew book value by roughly 5% and generated nearly 14% in total economic return for our shareholders.”
Nierenberg highlighted that the Rithm platform is growing, and they’ve added great people as it pivots towards being an alternative asset manager.
“We expect 2023 to present material opportunities for Rithm and our operating companies,” he added. “We will continue to invest in our core strategies while expanding in the new areas highlighted above. We are excited about our private capital business, which should generate new and recurring fee streams for our shareholders while driving the next phase of our growth. I am proud of what we’ve accomplished thus far and look forward to the future of Rithm.”
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