Solid returns from its originations and servicing divisions
Rithm Capital, the parent company of mortgage lender Newrez, has posted its financial results for the third quarter of 2024.
For the quarter ending September 30, Rithm recorded a GAAP net income of $97 million, or $0.20 per diluted share, alongside earnings available for distribution of $270.3 million, or $0.54 per share. The company declared a common dividend totaling $129.9 million, or $0.25 per share, with its book value per share reaching $12.31.
In an effort to boost capital, Rithm sold 30 million shares of common stock, generating approximately $340 million in gross proceeds.
“Rithm had another terrific quarter in Q3 with the entire business demonstrating both operational resilience and earnings durability, which are increasingly the hallmarks of our well-balanced model,” said Michael Nierenberg, chairman, CEO, and president of Rithm Capital.
Newrez, Rithm’s origination and servicing arm, reported a pre-tax income reaching $245.9 million, excluding a mark-to-market loss of $558.2 million on mortgage servicing rights. This marked an increase from the previous quarter’s pre-tax income of $227.6 million, producing a 24% return on equity (ROE) with $4.3 billion in equity.
Newrez’s servicing portfolio reached $755 billion in unpaid principal balance (UPB), a 34% increase from the same period last year. This includes $233 billion in third-party servicing, which grew 116% year-over-year. The company also saw an uptick in loan originations, with $15.9 billion in funded production, reflecting a 9% increase from the previous quarter and a 43% increase from the previous year.
Genesis, Rithm’s mortgage loans receivable division, posted a pre-tax income of $35.1 million, achieving an 18% pre-tax ROE on $743 million in equity. Genesis originated $761 million in loans this quarter, marking a 26% year-over-year growth. Additionally, the segment completed its second-largest residential transitional loan securitization at $450 million, focusing on new construction projects.
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Rithm’s Sculptor division reported approximately $34 billion in assets under management (AUM) as of September 30. The division successfully closed the first round of its Real Estate Fund V at $1.3 billion, targeting strategic real estate investments, and issued a $400 million U.S. Collateralized Loan Obligation (CLO).
“Our core businesses are consistently creating value for shareholders through earnings, which is either distributed as dividends or reinvested back into compounding our growth, diversifying earnings and positioning the business for future success to benefit our shareholders and LPs alike,” added Nierenberg.
Board appointments
Rithm Capital also announced the election of two independent board members: Ranjit Kripalani, known for his tenure at Griffin Realty Trust and Countrywide Financial Corp., and William Addas, formerly of BofA Securities and Deutsche Bank. Both appointments will take effect on November 1.
“We are extremely excited to announce Ron and Will as new additions to our board of directors during an exciting time in Rithm Capital’s growth as an asset manager,” said Nierenberg said in a Press release. “Both Ron and Will bring tremendous capital markets experience and practical industry knowledge to the board. We look forward to working with Ron and Will as we continue to execute on our strategy, diversify and drive growth across our businesses and enhance value for our stakeholders.”
Further expanding its leadership, Rithm appointed Andrew Sloves as managing director and a member of the investment committee. Sloves, who resigned from his board position at Rithm to assume the new role, will focus on advancing the company’s investment platform.
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