Rithm Capital considering options in commercial RE

Abstract

"Obviously, we rebranded to Rithm Capital and I think that reflects where we are today as a company and also the desire to diversify away from more on the single-family residential side," President and CEO Michael Nierenberg said in the company's second-quarter earnings call. In its first earnings presentation since its rebranding and internalization of management services, the New York-based company reported a net loss of $3.3 million in the second quarter. Compared to the first quarter, bottom line numbers decreased by just over 100% from a profit of $661.3 million. Year-over-year, the loss came in 103% lower from $121.3 million in profit. "We're very, very disciplined in that we're not going to originate a mortgage loan that doesn't make money just to kind of substantiate revenue."In the second-quarter, originations delivered a net loss of $21.1 million, compared to a profit of $19 million three months earlier and $151.3 million last year. While a loss of that magnitude might cause some worry for many companies, the effect on Rithm is a little more muted, according to Eric Hagen, mortgage and specialty finance analyst at BTIG."While it is operationally a significant component of the company, it consumes only $655 million of capital at this point, or less than 10% of total equity," he said in a post-earnings research note. Rithm's servicing portfolio's unpaid principal balance totaled $498 billion on June 30, up from $496.9 billion in the first quarter and $305.9 billion a year ago.