Rithm Capital (RITM)·Q4 2025 Earnings Summary

Rithm Capital Crushes Q4 as Earnings Jump 34% Above Estimates

February 3, 2026 · by Fintool AI Agent

Rithm Capital (NYSE: RITM) delivered a blowout Q4 2025, with Earnings Available for Distribution (EAD) per share of $0.74 crushing the $0.55 consensus estimate by 34.5%. Revenue of $1.29 billion also topped expectations of $1.26 billion by 2.4%. The diversified alternative asset manager closed a transformational year with two major acquisitions completed in December—Crestline Management ($18B AUM) and Paramount Group (9.9M sq ft Class A office)—pushing total investable assets above $100 billion.

Did Rithm Capital Beat Earnings?

Decisively yes. This marks Rithm's 25th consecutive quarter where EAD exceeded common dividends paid—a remarkable track record of earnings consistency.

Note on GAAP vs. EAD: The GAAP EPS of $0.09 reflects a $(421.8) million mark-to-market loss on mortgage servicing rights net of hedges. EAD strips out these non-cash MSR valuation swings, making it the more relevant profitability metric for mortgage REITs like Rithm.

For the full year 2025, Rithm delivered:

• GAAP Net Income: $567.2 million ($1.04 per diluted share)
• EAD: $1.28 billion ($2.35 per diluted share)—up 12% YoY
• EAD Return on Equity: 19%
• Cumulative Dividends Since Inception: $6.4 billion

How Did the Stock React?

RITM shares rose 2.2% in aftermarket trading to $11.04, recovering from the regular session close of $10.80. The stock had declined roughly 10% from its January high of $12.00 in the days leading up to earnings amid broader market volatility, setting up a favorable entry point for the beat.

At the current price, RITM trades at approximately 0.85x book value ($10.80 / $12.66), offering a compelling discount for a company generating 19% EAD ROE with a $0.25 quarterly dividend (9.2% yield).

Is Rithm Undervalued? Management's SOTP Analysis

Management makes a compelling case that Rithm trades well below the intrinsic value of its parts. The company provided an illustrative sum-of-the-parts (SOTP) valuation showing 40-110% potential upside.

The current 0.86x P/BV valuation places Rithm in the middle of hybrid mortgage REIT peers, but management argues this "discounts the intrinsic value of Rithm's differentiated model and operating platforms." The Rocket-Mr. Cooper deal at 2.0x P/BV provides a recent comp for mortgage platforms.

What Did Management Say?

CEO Michael Nierenberg struck a disciplined but confident tone on the earnings call:

"We're not in a race to grow origination. We're not in a race to grow AUM unless we can make money. So when you think about it, if folks are out there pricing origination through the market, it's not going to be us."

"The one thing you'll get from us, we're not gonna show up in a meeting or tell you that we're the best in anything that we do, because if we take that approach, we're not gonna be the best. But we always have things to learn. While saying that, we have a very, very good company, and we care first about driving results."

On the Paramount office acquisition:

"When we look at the Paramount Group, and you think about the dislocation in office and our ability... to take advantage of a dislocated sector. We bought a company where the going-in cap rate is 7%, our acquisition basis is $585 a sq ft. We're buying Class A office buildings in two gateway cities at a 40% discount to pre-COVID values."

On the technology investments and potential valuation:

"If this thing [Valon] plays out the way that we think it could and will, we believe that the sheer size of, or the market valuation of Valon could be a substantial P&L contributor to our business... When you look at tech valuations, and if this company is worth $10 billion, for example, that could be worth a couple of dollars a share."

What Changed From Last Quarter?

Several transformational developments in Q4:

1. Crestline Acquisition Closed (Dec 1, 2025): Added $18 billion in AUM across direct lending, opportunistic credit, NAV-based lending, and insurance strategies. Strong historical returns: Capital Solutions 14.7% net IRR, Direct Lending 12.8% net IRR, Portfolio Finance 11.0% net IRR.

2. Paramount Group Acquisition Closed (Dec 19, 2025): Acquired at ~7% going-in cap rate and $585/sq ft basis—a 40% discount to pre-COVID values and 75% discount to replacement cost. The 9.9M sq ft Class A office portfolio in NYC and San Francisco has 86.9% leased occupancy with 8.4-year average lease terms.

3. Record NQM Securitization: Completed three non-qualified mortgage securitizations totaling $1.5 billion in Q4—a quarterly record. Full-year NQM securitizations reached $4.0 billion, also a record.

4. Sculptor Real Estate Fund V Closed: $5.5 billion in commitments, the largest in Sculptor's real estate fund series.

Segment Performance Deep Dive

Origination & Servicing (Newrez)

Newrez continues to demonstrate cost leadership and scale advantages:

The $95 cost advantage per loan versus the industry average is a significant structural moat. Newrez is the #3 US mortgage servicer and #5 US mortgage lender.

Key 2025 product growth: Non-QM +198% YoY, Home Equity +71% YoY, Co-issue +181% YoY.

Technology Investments:

• Valon Technologies: Servicing operating system partnership with significant equity stake. Management believes Valon could be worth "a couple of dollars a share" if valued at $10B. Transition begins 2027.
• HomeVision: Underwriting decision engine with AI at its core. First phase rollout has already "doubled underwriting capacity."
• Crypto Qualification: Newrez became "the first major lender to recognize cryptocurrency assets for mortgage qualification"—relevant as 20% of US adults own crypto.

Asset Management (Sculptor + Crestline)

The asset management segment saw AUM grow to $63 billion across the combined platform.

Sculptor Highlights:

Crestline Highlights (Acquired Dec 2025):

Residential Transitional Lending (Genesis Capital)

Genesis Capital continues its breakout growth as the second-largest US residential transitional lender:

Commercial Real Estate (Paramount)

The Paramount acquisition positions Rithm in Class A office at what management believes is a cyclical trough:

Market tailwinds are emerging: NYC Midtown availability fell to 13.4% from 16.4% YoY with leasing velocity of 19.5M sq ft (highest since 2018). San Francisco availability dropped to 34.2% from 37.3%, with AI companies contributing >20% of 2025 leasing.

What's the Outlook for Mortgage Volumes?

Refi activity drove a notable shift in Q4, with refinances comprising over 40% of funded volume—the highest percentage in several years. This reflected the late summer/September rate rally that drove prepayment speeds higher into Q4.

Looking ahead, Newrez President Baron Silverstein forecasts 2026 production up approximately 10%, in line with market estimates. The "Trump bump" in January saw mortgage spreads tighten, boosting production entering Q1 2026.

However, management repeatedly emphasized discipline over volume growth:

"If folks are out there pricing origination through the market, it's not going to be us. Origination volumes will vary. Similarly, when you think about the MSR business, we're fully hedged against our MSR... You are going to have some mark-to-market volatility in a quarter when rates move or mortgage spreads tighten. It's just the nature of the business."

Macro Tailwinds for 2026

Management highlighted several favorable macro trends:

1. Pro-Growth Policy Environment: Monetary and fiscal policies are "pro-growth and pro-liquidity with easy financial conditions"
2. Steepening Yield Curve: Strong growth and US deficit pressures putting upward pressure on long-end rates
3. Housing Policy Focus: GSEs expected to purchase $200 billion of Agency MBS bonds
4. Consumer Strength: Higher minimum wages, lower oil prices, and increased cash piles for 80% of households
5. Asset Valuations Reverting: Agency MBS and office CRE "finally reverting to higher valuations"

Implications for Rithm:

• Newrez: Higher purchase and refinance volumes (both markets forecast +8-9% in 2026)
• Genesis: Continued lending growth amid potential for higher home sales
• Balance Sheet: Technical and fundamental tailwinds for securitized products

Capital Allocation and Dividend

Rithm maintained its quarterly dividend at $0.25 per share, consistent with prior quarters. The full-year payout totaled $1.00 per share with a 9.2% dividend yield.

At EAD of $0.74/share vs. a $0.25 dividend, the Q4 payout ratio was just 33%, providing ample coverage and flexibility for continued strategic investments.

Balance Sheet Snapshot

The significant increase in real estate and intangibles reflects the Crestline and Paramount acquisitions closed in December.

Key Risks to Watch

1. Interest Rate Sensitivity: MSR values remain volatile. The $(421.8) million MTM loss in Q4 (net of hedges) shows rates continue to whipsaw the portfolio.

2. Integration Execution: Two major acquisitions closed in December 2025. Successfully integrating Crestline ($18B AUM) and Paramount (9.9M sq ft) while maintaining profitability will be critical in 2026.

3. Office Exposure: The Paramount acquisition brings Class A office real estate in NYC and San Francisco. While management touts the discount to replacement cost and improving fundamentals, the sector carries headline risk.

4. Complexity: With four operating segments, $100B+ in investable assets, and multiple acquisitions, the company's complexity makes it challenging to value on traditional metrics.

Q&A Highlights

Several key themes emerged from the analyst Q&A:

On Mortgage Competition and Pricing Discipline: When asked about competitors being "irrational" on gain on sale margins, CEO Nierenberg was direct: "Certain players are more aggressive. It doesn't mean they're gonna make more money... The breadth of the company, when we were able to put up a $400 million quarter in Q4, and take a little bit of a more conservative approach [on MSR marks], I think that's something that really differentiates us."

On 2026 Production Outlook: President Baron Silverstein: "Our forecast for 2026 is gonna be up around where the market is estimating, which is approximately 10%... As we continue to connect with our homeowners and deliver better and faster service, we'll continue to pick up market share."

On C-Corp Conversion Timeline: The REIT to C-Corp transition came up multiple times. Nierenberg indicated: "At some point, we do need to be a C-Corp. We need to grow our asset management business a little bit more... I would expect at some point we get towards that [within the next year]. We're not going to be Blackstone, but the corporate structure works... You look at Blackstone, they got BXMT, Blackstone's a C corp up top."

On Paramount Capital Raising: "We're in no rush to turn around and just say, 'Okay, we have to do a fund, or we're gonna bring in JV partners.' We're exploring both... I think you'll see a combination of both fundraises, permanent capital raises, as well as JV-related partnerships."

On Key Hires: Nierenberg revealed two significant additions: "One is a former partner of mine from Fortress who will help us to lead the asset management business... Then we hired somebody that had retired from Blackstone to help on leading the capital formation business."

What Did Peter Brindley Say About Office?

Paramount President Peter Brindley provided bullish commentary on the office recovery:

"In 2025, we leased more than 1.7 million sq ft in our core assets, up 235% from 2024, and our highest annual total on record... At year-end, our New York core portfolio's leased occupancy was 92.8% at share, up 780 basis points year-over-year."

"Return to work is no longer really a conversation. Work from home is in the rearview mirror in New York. The city has more energy than I think it's ever had, and it feels really good."

On San Francisco and AI demand:

"In 2025, San Francisco-based companies raised $134 billion of venture capital funding, directed in large part to AI companies, which accounted for 143 deals, totaling approximately 2 million sq ft, more than 20% of San Francisco's annual leasing total. Approximately 56% of this AI demand originated from tenants that are new to the market, further reinforcing San Francisco's growing importance as an AI hub."

Nierenberg added context on investor interest: "The amount of incoming phone calls we've had from folks that wanna play the recovery investment in San Francisco has been extremely significant."

Forward Catalysts

• Q1 2026 Integration Updates: First full quarter contribution from Crestline and Paramount
• Sculptor Real Estate Fund V Deployment: With $5.5B committed, deployment activity should drive management fees
• Crestline Perpetual BDC: Launched September 2025 with ~$400M commitments, expected to scale
• Technology Integrations: Valon servicing rollout begins 2027, HomeVision has already "doubled underwriting capacity"
• C-Corp Conversion: Management indicated expectation to convert within next year
• Rate Environment: MSR mark-to-market expected to reverse in Q1 2026 based on current rates

The Bottom Line

Rithm Capital delivered a blowout Q4 that validated management's multi-year transformation strategy. The 34.5% EPS beat demonstrates the diversification benefits of the platform, with four distinct segments contributing to a 19% full-year EAD ROE.

Management's SOTP analysis suggests the current 0.86x P/BV valuation significantly undervalues the company's parts, with an illustrative range of $15.28-$23.19 per share implying 40-110% upside. With shares trading at a significant discount to book value and a 9%+ dividend yield, RITM offers an attractive risk-reward profile for investors comfortable with mortgage REIT complexity.

The key question for 2026: Can management successfully integrate Crestline and Paramount while sustaining this level of execution?

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Earnings materials published February 3, 2026. Company IR available at rithmcap.com