RITM - Earnings call transcript Q2 2024

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Operator

Good morning, and welcome to the Rithm Capital Second Quarter 2024 Earnings Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Emma Bolla, Associate General Counsel. Please go ahead.

Emma Bolla

Thank you, and good morning, everyone. I would like to thank you for joining us today for Rithm Capital's Second Quarter 2024 Earnings Call.

Newrez. Throughout Michael Santoro, CEO Rithm earnings Chief Baron President are Rithm President Capital; supplement today are Capital Silverstein, Nick we website, this Capital; Financial of the that me was Nierenberg, reference morning and Chairman, of and going posted Joining to call, to the Rithm the Officer of www.rithmcap.com.

be so, actual to forward-looking encourage download the review reports the SEC. made regarding would results. like forward-looking point materially our If their that risk uncertain to today review from supplement These nature, press you've filed presentation and with statements. you to will and in not statements, by I quarterly the the may our disclaimers and I'd in encourage already statements statements earnings factors out done certain are to now. I and release contained you annual differ

In most over can addition, call. with discussing these today's be earnings call our will of measures that, non-GAAP comparable Michael. during measures supplement. And I directly turn some financial we found in will the to to GAAP the Reconciliations be measures

Michael Nierenberg

contributions and all lines. and good morning, strong joining our for call. of had Emma, an quarter with thanks Rithm business excellent Thanks, the everyone, from

the direct of While growth to to which this is our continue of business lending point, company. our focus we revaluation on have to important the very the lines, business gotten us alternative asset

is RTL the portfolio in year and lender, having During conversations last and owned the assets real our excellent November have our business, very our fund. the seeing with multi-strat performance and The are since Genesis, Newrez, is Sculptor strong we AUM in estate which stable quarter, company, mortgage teams great generated LPs. of credit, returns. of

enterprise billion did for CLO is for mortgage Sculptor $XX mortgage fee-related During previously franchise, several commercial to acquisition we're at on the earnings the billion the owned Ajax, support SLS, of our residential investment which equity previously REIT, of Rithm the This of REIT, is We going house announced and that servicing we transition which the funds. This top the company which both an now as reposition value Sculptor announced CLO another Newrez helps shareholders contract help will announced management We acquisition should company. deal a it. into platform, the in the completed to in was and Great business, transactions. the closed servicing. and in increase great generate house. We added previously a of a we closed for grow third-party the returns our captive $XXX opportunistic generates which and quarter, mortgage

on added also power MSRs We acquisition. billion This with franchise. the partnered this our excess where we $XX of Sculptor of shows

with positioned the extremely this will well bodes for we to This lead costs mortgage-related assets online. I'm who's a mortgage the for well for as supplement, going higher This and our of X. from company. the rate our SOFR I'll show LPs. shareholders our see illustrating of business a nominal presentation a that's I'm down our sum solid cost will bit comes and couple value of prices to Baron, earnings. We the to steeper tighter that hopeful focus the of lower hopefully our beginning Fed our me do been earnings of the and Looking on rates lowering on of value spreads company are Page expectations start believe parts slides higher very and generate future help this for with the thing and lower will returns borrowing returns for company. a curve will you'll business. has and which going help now finance the time. picture, with this will refer good the and at with shareholders. One the There's and LPs macro the lead little the posted in September, our in basis. proposition to different

This kind overall the franchise. to of -- slide is of Page demonstrates the power the this the So X. now

and of that Sculptor Total dividends. be real whether that it at on of whether XXX%. When and If power it the mortgage, the side. it you power over our the real in in, on for there at return Rithm I'm what breadth will not backwards, whether and of franchise just a investment bit company paid multi-strat businesses capital. lending billion with the look we look to around be when on continued started franchise be look those, billion consumer whether in little back our we direct credit, it sector And is you equity you future really XXXX don't billion a excited is was credit, of look capital. permanent Today, then estate, our of you the expertise in in of We at investment company you estate, be. $X.X grow history the taking $X you the be $X.X of look out fund, have the have or economic the team, side, at desire

$X.XX of to of the little return our per $X.XX or GAAP million $XXX for end and intrinsic return X.X%. on the liquidity available As of diluted Earnings diluted talk and look equity value Dividend parts. sum QX after at June. $X.X financial of and distribution about the million That's the or end as X.X% still Earnings book you and XX%, share. a net QX -- I'm share. X diluted highlights, bit per value of dividend at share. QX, yield $X.XX. $XXX cash a $XX.XX per distribution, value billion. Page was income the Economic for X, going

end but of and $XX.XX. cap. $X.X of us Going -- companies Book there valuation think, Newrez, a Current end like billion was the I in, we'll X.Xx. of the to back, of the the billion. When at back end in anybody you of was there the you compare parts, you June mortgage public out trade the June, at Share are this $X.X of can and range in value put X.X sum end to to company, again, at would some look go QX QX. market at out of the of price the to when We public else you peers encourage -- at I there. business that look were some look there.

GAAP we Sculptor, And just acquisition investment we generate at portfolio of on you and not multiple I assume prop the us at, value again, time X.X very at point put the measures, sum and at We parts -- know you our do value can On to it's book and continues returns you -- X.Xx in the X.Xx business valuation we think at should acquisition roughly what a -- of XX% our to really I'd Xx the going when we're you a which look I cost get of the the some grow. cost. What $XX whatever is We'll just shareholders put have numbers, valuation, lift, It Genesis about -- end. The of there, high gets make at one value value to our encourage and between of of math talking roughly on the then our point. between that a there business point all can this. want, and number number at to great XX%. of per range one be. to Xx $XX a book to I'm -- low share looking ton think that you And a our for in price behind exact does, spend look or of the this. good X, on real don't up the at -- LPs. Page again,

we make is different that we Capital And it You X, go. where direct today? best think our why could and a value it great look ensure we is businesses, where a be that our today the our Newrez, Again, LPs. Page X.X, all business. the hard results as have sure we could to equities. standpoint, are we at team we do why of be Rithm we and shareholders that here, for and performance can lending or generate Genesis this across people could to take Again, from both current platforms, think buy

One of is talks a to sheet. just Rithm the with of doesn't about lending slides of direct of overall more in see any platform. one minute, the I'll balance other compete the things really strategies. And Rithm get the leverage you'll our commercial. It It's of the

and opening partnership I franchise. large things in of the you $XX-odd look with of opened excess was that our bought Sculptor the we MSRs a quarter, is remarks did we during up that One pool in the billion, if

you lending I bit. should where on grow we we quarter. business little EBITDA at to in to and hopefully of and the look LP believe, and by that a in that XX% lending great lead the then is the side, the So acquired I time going around Page in that business, 'XX. in up continue about business, since up the investments. When Sculptor both of we that we go we're another about the will currently the just acquired spoke direct the markets Genesis that direct we there 'XX. a more of sense it something I X, what they're business. June franchise about seeing from Capital, company growth -- Again, probably to way it's investment time as look acquired December, to that help just think at the talking think we that we business results goes give did our since and the power

cost there Genesis days. the securitization our healthy market During lowering capital extremely at first and these is rated financing our The quarter, level. Financing. the did securitization -- we of

to come credit had the quarter And as in If a some you the, Great during a you things look as securitizations and I acquisition the the about performance at and first, it and market not real to Bloomberg other and at we CLOs to Sculptor estate also franchise, talk your then our I'm for completed most the high-yield or there of -- you other just closed as going And Ajax. I'll fund. over that tons then again, They that look did we well. When going whether deals we tons Baron. of is in we back thing for at important to are X -- but look minute turn $XXX new X, performance that million. say, Sculptor AUM look -- in growth, of the closed well at the first. Page us, investment did, mention, our space,

the if yield continues lead to will that earlier, assets, in front on or to Just think lower is rates the do the key off. end of macroeconomic going basis mortgage-related end curve the September the Fed points, I doing to cost selling XX We financing continue themes. data with should better spoke lower as steepen by about back

supply, at You an when you about yesterday, treasury treasury could the $XX make think look True argument reading I was I -- trillion. the that deficit is net

this $X get recycled income. you that, roughly this at look does towards back the trillion Japan you where earn hit think expect what raising going people of about We net treasury mean? year. they're think could morning, interest Japan more see When rates you supply Potentially, all Bank of capital to that to market the some

we be will So we believe lot that The is a we persist. comforting that continue will plays -- there'll credit how -- volatility. Private volatility, to and see there world geopolitical it to expand. market in continue will that more lot not be be live out. Market a environment to all interesting believe that will

for just of world. fund. for that and big seize we're a to out a That's this actually morning, us on it credit Ares excited lot There's now. they announced, there, raised new You for private billion opportunity kind It's saw of opportunity. $XX

get do I in on commercial that we'll estate, think real one and -- a I minute. comment to then last back

estate space, -- for there and the of in about have ton real as I'll of we a the that an is ton that and commercial in world, folks in have looking few. credit We a a talk demand capital institution incoming for

pick it over XX. turn up who I'll to So Baron, with that, on will Slide

Baron Silverstein

largest for focused morning, another us industry. to the is our to where our And largest through our servicer and All management now to here up everyone. of third-party on firmly wrapped in well base. We're our Thank be second disciplined there and client Newrez allows drive just Good sets originations business, expansion quarter in We growth met, just the then really is our fifth at gaining customers also rally. right? Michael. lender we're want they we're mode, recapture and And market engine growth and really the us and rate meet that and you, with how right. nonbank great share

clients, a clients -- customer servicing has platform not our bringing continue share, only also for long and base. gaining third-party but history gain of on on share servicing wallet share our we scale market to and and market gain Our new existing

business our stay for So overall grow to continue organically while operational focused maximizing on and view our but is both our shareholders. our and we performance inorganically, excellence can

another foundation last already We few building we've strong XX. quarter, over that's upon delivered Slide just the the to years. Moving constructed and

MSR Our drivers $XX our second billion right? model pretax that quarter portfolio Excluding We Michael a quarter-over-quarter income of third-party mentioned quarter-over-quarter, strength $XX delivering quarter-over-quarter. the reinforcing acquisition on owned and overall. Key in excluding earlier. servicing, was servicing million, income and balanced X% business owned ROE, pretax third-party XX% increased of XX% MSR portfolio, billion closed our the MSR the May growing MSRs in our $XXX mark-to-market, XX% SLS, include added on mark-to-market which X

We onto and so still of which time believe transition SLS disruptions and servicing to loans management. also cost while short in to maximizing we a expense many of industry completed all such homeowner in our XXX,XXX-plus the move the the loans period first platform, minimizing be

margin tell originations but correspondent been, story benefited our the non-QM to pressures, well in originations the just as it's business believe also wholesale say, overall by to to Back overall. Overall, looking best and in and Our of Newrez performed is both growth positioned channels. quarter-over-quarter, XX% you, I'm the forward production up our and home I'll also continuing of to co-issue market. equity volume spite led and capabilities ever addition with from I Michael. business

Michael Nierenberg

then Most there's Genesis strong time, to high-quality Q&A. very Thanks, we'll on transitional a Baron. the and A up that's open few sponsors. again, for our lending loans more Capital, me, slides focused production. the for sponsors acquired we're capital first of they million same business, were full to company, the between providing recourse very back When I close to $X.X $XXX that we of something the think to. In quarter, did something doing extremely we do bit It's the about of acquired and on a the look billion I good mentioned, we only LP. returns that. When $X-plus this a production. what to that XX, that not $X up business ROE, is little is It's billion north and we'll be shareholders production. you billion in EBITDA And of going since again, for growth. hit time as very and Page This year, strong generating at theme we us. common is about for XX%

XX% quarter, For the ROE.

getting way, transaction you a end month, gave think company. I Sculptor, holiday towards little November, through XX% if XX% a strong the also rate, of when originated closed few of And loan transition of value. you date, before the it comments you about this only business. On We the are stuff. of our X%, to at that shows been credit the are done to of delinquencies who look which the what's is portfolio We loans bit a December floating overall culture

X $XXX and time not returns CLOs, running from for for forward here. the the Again, to really good. QX that's -- the Very very think that for as So closed AUM team, to partnership working the businesses, growing teams, support look and great CLOs the been to the these about performing shareholders business side has the and Highlights. putting an up real continues you months race. LPs million. I for about business. A+ it's be that years. X we that multi-strat It's mentioned over something estate performance about prospects together XX-plus excited been of for credit around that folks when are to the

more careers. What and towards go fund helps estate through year. both here real what at a overall unique direct the in estate to is us the folks office, look You'll the side. commercial Rithm we estate investment periods doing the legacy in capital Sculptor I the Sculptor's, of some we're credit in best see that in it new very CLO you in end estate, of real platform and of puts say very, The business real on side, this, as million more And between AUM, of capital. real we've the example. the $XXX gives took at obviously, no position one increase we for a the really seen the lending activity our With think would invest importantly, when like long-term lending

legacy Rithm, XX, capital estate have earlier, managed of is no pointed We commercial side. Great a built very slide balance the for issues the And on Rithm to externally have as investing that fresh out right Great that was capital, the Ajax by you formerly When page, known vehicle what everybody. again, solutions strong. a in go. Overall side I is the if best We on with very out, we're real is being about performance you pointed New believe Page at of we as where Residential. to sheet, that business going one same during on team in we're look excited Ajax. very, Rithm, QX, we here permanent look that's Rithm, period the

whether course alongside of commercial We selling deploy real level, both raising capital look the not today in there's estate, in we well. A the the way I time. lending the think all verticals, the there Rithm -- will it legacy level, forward around of some direct investment the And about expertise whether businesses. capital or with some of loan of is the as our at be redeploying to it ton if residential whether experience $XXX at third-party world. Capital markets be some Over capital, we unless to into be commercial or QX, assets, it consumer that down likely equity. Sculptor have in potentially over capital of that that any reperforming come something growing potentially will base with is million residential, great enter occur opportunities public house the

-- segment leave performance. the before overall, I'll So

You you into a to there who peers great take we'll very good could is Q&A. excited encourage quarter, for company shareholders. With Newrez comments. a yourselves, have it and really done open going. later we'll the and great honing business some out public look where And have and get at look to Baron's There our are at Q&A. But overall, the again, that it very first, at of I'd operator, the LPs back have AUM performance driving and in up well. as for job growth a Baron turn team job. returns done a side the on that, I'll and

Operator

[Operator first comes from question BTIG. Instructions] Hagen The Eric with

Eric Hagen

are sharply On its in the forward? growth, the for feeling estimate how given on maybe end an that have the excess we might portfolio? you Do your the like how MSR about portfolio, bought you drop could going mean, at the much during amortization if MSRs capital incur I leverage including going And MSR curve quarter? yield just the do of shift forward rates either you allocation feel you

Michael Nierenberg

you own really But we let it's too of there. Those seasoned, at these early very going -- serviced very the the a very, Cooper. tune at season. rights, Residential. probably to very are those MSRs me Amortization just be give impaired. an currently to XX-year where you in servicing gave are back Mortgage legacy are something New MSR credit It questions. thesis -- me sense fund MSRs, on So our are liquidation the These was will the excess many same MSRs. of very, steady

So our as relationship it there goes back well. to

that So we provisions Cooper portfolio. on -- with have recaptured and

the of at in when slides, CPR. probably what on you Cooper amortization, Current on mortgage and say market. you On to a are broader roughly amortization XX% X.XX%, is at I this front, theme more if insurance up Hence an mortgage on would the came look the X rates is amortization home roughly basis. I think look annual XX%

of basis going hedge in market points the to call we think our not more lot MSRs where I'm on it right don't look have seeing huge I marks. money, our about roughly So in seeing are added MSRs. Yes, not our things I'm them that. a now. our portfolio, about MSR XXX how and money I gross portfolio. when X%, I MSR worried added a worried MSRs. think about of at WAC, refinancing We're XX% those the you're turnover We're X

some Home housing when think I home levels the although are market, activity was price prices are yesterday, home continue released. data more down. to look you at was that prices -- increase, there

it's like So why not sure -- frankly. almost I'm they're quite increasing,

something a think don't needs But market. do origination robust I I give. So to see

lot The a would trillion. something I market think say today, are production for don't the other numbers there's origination I around because refinancing the is extremely of estimating high think thing to -- of capacity. in this is activity. going year $X.X don't capacity I we're -- I see I lot a

against think refinancing I there headwinds are the activity.

in that, everything our -- is days. company building on saying that's all our focus mortgage brand else recapture, While and the on these recapture going high extremely

activity X, rally rates see levels see. we're refinancing here, I amortization, continue in move to increase So but of now right going a to don't will huge the if

how far our for the -- on finance question. X business, great cities. As been we've course road past multiple of I in the weeks as kind the of we

get. the be a in more market high-yield relying some of We on frequent funding that we over issuer bank the less time will

the of capital thing business. hit years. the the The we'll with We've likely done that other our do MSR is over markets securitizations we'll around more course

I good where are. we So feel about

the far I this We would creates I example, shareholders CLO real use in opportunities size a no have the you, most commercial brought of sector not, we LPs. other need. places If fund. captive we return plenty as set the everything and things could capital. of that put example as up we see if an on as One for the an business think great tell think we out will grow we equity that Currently, opportunity important I us. The estate for franchise Sculptor deploy get as about in we race to world. the are front assets there's MSR us I want more how in of have is there

lending feel capital us, looking where from businesses, about all these different us are financing being So direct thinking about we good investment business, perspective. I where we at overall the very allocation, in think an in we are,

You excited more secured of again telling some the but over That about yield high time us. will our financing, pay will see from down we're story.

Eric Hagen

last outlook the of Super I here, for much mean interest I production catalyze growth one there? lower what's capital Do you Genesis? over a mean, -- do feel there? feel thoughtful. over maybe do time? -- allocate to how new expect you more the you could like produce What's lot And rates like you could there

Michael Nierenberg

company grown credit-first and There capitalized. the market has This some will that business. new is who substantially. market I the Yes, are are say, pretty fairly entering well a business, are participants

our that, are saying whether of sponsors continue focused going be the bridge loans, renovating whether be that strongest business, they strongest sponsors, is on business. be builders, to some some whether with folks of they the homes, credit-first the While the business they in we're

housings off, regional or performs, the But pretty credit perform grow. credit about over cetera, as business time direct need huge we're overall banks markets the drive, business. think, that back. coming headwinds as we I the think long and space as direction there's the a substantially of the pull If concerned as et So or doesn't we'll lending could in grow will

Operator

with comes from Bose KBW. The George next question

Bose George

Newrez. about to wanted I talk Actually,

in are noted you of shown a the very market. are as some As X, the bit valued than Slide peers you -- on and higher quite

that you thinking Or bridge needs Newrez, are that to kind do gap? done something mean, So to listing be is think you a for of that? that about I how

Michael Nierenberg

of to some of with this valued. advisers, I closely our Bose, were that us. is a We're working we ask properly you some question. well knew very our capital this internally We recurring so something maximizing banking our on as -- get going external theme as that's -- friends our get for structure

everything and the show in the Having flexibility. of reason we Slides really that X to under the a think X value is lot gives the Rithm umbrella put franchise. us of I

at if of and capital assets. to financing 'XX, -- equity power our billion We equity of end to in to -- going you business. sense, around of done you is, I done a think deployment, bit a want of we've If the numbers. see that We've happening billion $X.X we $X asset north an put look acquired -- of we've you of up stuff the what in and players we work But And in the bunch do. think equity you the look one perspective, at of you to at when look is, in to give a call I very that to the franchise, way going extremely to enables out from about and the the illustrate in little or just as work. What's that everything mortgage at is there. Hopefully, more company -- looking our mortgage you're a story our around compared general, company are some franchise it's we a others, and to questions high yield. pure-play overall structure, get undervalued financing Eric's see anything better performing obviously, tell undervalued. To line with around I capital would it's us some

and where you I PFSI give we give something are to a just or COOP trade, look If trade you take, think, like, Xx EBITDA Xx, sense. we at,

Bose George

listing is say? to sort an to And of so that remains just summarize, say fair it option. Is fair to that

Michael Nierenberg

a Yes. don't everything mean, I to if way and it's know it's again, at for yes, I value direct a looking increase listing -- shareholders. as we're something. But just anything or

Bose George

the debt is to level? to one Okay. Newrez? you've so of X, from on all value more allocating that you book Great. book corporate Is on then of actually how value that Newrez. the shown Slide of down The And that billion that get $X.X just billion $X

Michael Nierenberg

is, the Yes, allocation It's it sector. Bose. of corporate

Operator

James. Stephen comes with Raymond Laws The from next question

Stephen Laws

of expect don't touch A origination channels Can I continued outlook drive What you And half can coming you seem corresponding. targets. on the -- outlook into talk can about But know if have market your it's kind growth share growth? Baron, know for of you on you be do to in to share. I rates you the talk strong on quarter, side? margins. and dependent down. year volumes about market 'XX, back particularly

Baron Silverstein

for correspondent at a And in for have feel today We best We able kind we market And of we don't basically the to the return the share there. the first of return, that perspective. quarter. take we talked where really place to about a company we're best like really best at from we've has drive the have been been business have markets then where we us look and basically the looking overall target profitability. for the best right? And advantage overall,

And we up in we how second actually, we very were our while margin kind market going happy the in from were were to with share drive give quarter, quarter. we ourselves did Second the quarter, were growth able able from of to wholesale. market into additional where position overall first share we

that's better target our as kind core without believe of to of to really, to size And our as customers necessarily given where today Michael for evaluate is the as our can for customer it talked share well, then portfolio market having [indiscernible]. we business our overall we customers, we focus, there really improving of actually expanding by think going brand, is versus overall. kind servicing Our significant just how continuing about offer the market we out the experience. And a products our being gain

Stephen Laws

revenue Michael, believe was I can of occur business. year. good sequentially. fees pretty AUM about end talk the a Sculptor you up typically bit performance

moving sequential what forward? that about kind about how then line that we of think can So drove And you increase? talk

Michael Nierenberg

be I -- it's growth of it's again, what of I going think the story it's to -- a or of going fee-related I is across you rebuilding nature the more that's it's AUM prior is lumpy, what say until grow off-cycle would story. just quarter in and a Again, again, saw that's in real platform. But truly think so-called growth some realizations Yes, so business of that some is this the of to -- you the be investments earnings. generating

franchise, So Sculptor shows time. over would bit about episodic it it think I of honestly, realizations, power, overall be off-cycle good is the little but the within the investments a way will of

Stephen Laws

managing about or out? of coming your half in And quarter months? part Any you of -- how the and Series B float back taking those lastly, A this thoughts the the Or that I the think think to year. capital stack perhaps

Michael Nierenberg

Sure.

cuts our of If be $XX SOFR it our at So the bond is just mortgage billion we portfolio, example, mortgage deposits rates, whether have [indiscernible], whether SOFR+ look company, or for the large company, we the a billion when could banks. escrow things the using $XX at get one math, of paid Fed business the deposits. SOFR rough it with to at overall, -- fee you on the have that be

it rate. about way, think you are if So this those floating

you broad do market come think But quite how out, back -- some or to those if we the piece business overall point offer to the take and pie. is, about curve think resetting I think the look for they'll is there this over stay time. $XXX duration is at how we rates, hedging, just exchange frankly. out the But those the take of model million we'll and about one markets I either steepens Fed as think But cuts an now. likely we'll as the now, at point, and yield

other significant on The -- Fed at we're could We're the higher protection here. hedge the would amount to quick hedging. highest bond in short here a way MSR I where and probably the frankly, to added We've raising biased is that just neutral overall book market, that a thing, the the were tell Fed we not our of you note level seen for now. portfolios was rates years. When we've we rates, right of that other quite the fight where going

bit you little strategy. more So just to color the hedging give a on

Operator

question Crispin from Sandler. next The Piper with comes Love

Crispin Love

and building Just there. a Sculptor previous looking on question at

solid was from down discuss the the it or improved, what asset was quarter lower in for can drove whether expense comp XX% size you so. seasonal So Can quarter? about you comp management, or Revenues crystallization just not the And second in over it the quarter? profitability. shows first then

Michael Nierenberg

you'll numbers the the in more -- realizations quarter, you see more likely hit So most fourth quarter. the probably fourth comp see typically and in

million. $XX second During realizations think the I saw of quarter, we

again, see see hit it's going you'll the fourth comp to -- in what expenses you're So is, more quarter.

quarter. the see realizations in probably You'll more fourth

it's seeing where realizations off-cycle across helpful. that's quarter, Hopefully, I is the an like period of it broader the this on For mentioned, platform. investments you're some

Crispin Love

discuss then rates could And you get a refis of of don't you expect we That you? mortgage advantage to did refi side, level mention term. at on you to earlier, the just you on Newrez do But the for then you can how is there? see when near in market helpful. perspective drive take might to, And that a need to get recapture what

Michael Nierenberg

Yes.

So got you rate. here's X.XX% what mortgage are X%, I'd say. If our gross WACs a

-- with home I will that the believe trillion the [indiscernible] couple market. will while of is You to do the that dollars long $XX the rates it's September, costs yesterday, lower higher, and I of think curve ultimately where coming know still insurance got don't out numbers going -- got go. we there curve expectation to steepen the REITs be in trillion treasury likely here you think I a a issuance and Fed

market, So or I'm others. more than probably we so origination the less maybe are bullish on

thing that down mind correspondent break question have mortgage keeping origination and one MSR, flow not The I you is the prior asking business. cash and you Retaining the to really, think is in -- that profitable. the Baron it when really is so the keep important. about customer business,

if period X%, that to you other got a probably mortgage rates origination banker long the others think competing real break think X% for you're if time. doing of do somebody go every out I gain unit refi on mortgage against and one and origination down you a mortgage So the about side. want out the than think to there, and going about into this that and we really it constructive and business, side, large that you're to of drive could market refi be scenario, at gains. But that where pretty issue correspondent when play COVID-like pick we're you're to whether origination will look think side, capacity in outsized think best and more able so-called the at up, in going the become the and then players you some you whether correspondent you it if a a they less to about you're the person, gains see. I'm wholesale be took of it

customers point think those we in I'd the our where extremely is flow the side. market mind, side. cash the And -- thoughts the do loan. the my about to to thoughts and remain the just try keep gains. Keep on from just thing main origination MSR closed on out, and general, origination And competitive market correspondent us to other are for origination keep a to think thing I going -- you business, when in is think the about you're buying the

your the then and just loan, a to deliver So buy agencies capitalize you closed you you MSR. it

to that going have think about you're you business have to what advantage well. as correspondent the So in

pretty it's So a competitive market.

Operator

The with Trevor next Cranston question from Citizens JMP. comes

Trevor Cranston

sort WAC have do the follow-up question A guys the refi. weighted on But servicing MSR money far and Obviously, to and is what rate opportunity of in potential higher the much of of scenario? how mortgages current the for average, statistics out is on of on the the you close coupons rate in the rally scale portfolio pretty be servicing a potential could any book. recapture are of

Baron Silverstein

Yes.

So we and X% notional, a of coupon have approximately with billion $XXX above.

Trevor Cranston

Got it.

Okay.

in investment that you vehicle? a terms balance dive through Great you On how of funds or guys little the estate other opportunity, maybe see Rithm playing adding into doing out can to the versus some sheet in Ajax bit commercial real potentially that

Michael Nierenberg

CMBS and the vehicle Great AAA So it, getting were it opportunity, in a a a versus payer, had real flow doing -- would their equity a they've there together. more returns has job where years. big LPs as nonperforming The if side, returns you're of buying Ajax you for now team like mean, turn you coupons XX-plus flow. niche-type amount there in for sheet, kind looks We a my you capital focus investing here, balance coming a has generating on of we're well. When I at over at loans. Big private been there look the remarks, on, got outstanding. The estate discounts. large of leverage don't Rithm of years. estate XX-plus opening And been real you if teens-type it's assets. When together I not before on I more which we've small. in in what best-in-class. time. what for when are reperforming recently guys you is it's on side put leadership done great have the And fantastic you creating look you're Sculptor lot dividend think The the cash really about cash been the mentioned that capital credit say,

with what have investment a a all direct you for folks the direct point, ton period maybe a of look would business from some other now, frankly, But us have and with more an together. for third-party But competing sides standpoint. partners all a We the Sculptor is sheet stuff you'll balance off best-in-class different balance today, house. At as of more well, at have anything capital professional Rithm sheet. point, overall that as doing relationships quite Rithm with do At really lending of funds been I business is of the have, some see this long on business. the in lending not of we'll time, with, of

Operator

the like to closing for turn any This over I Michael to concludes Nierenberg remarks. would conference back our question-and-answer session.

Michael Nierenberg

questions. think happy the some always a our in do there a at summer. and Have much. the with follow-up everybody. look of great there's do for deck. thanks Have good Well, information rest so I Thanks to

Operator

now you presentation. conference concluded. for Thank attending The has today's

may disconnect. You now

Rithm Capital (RITM) 31 Jul 242024 Q2 Earnings call transcript