Financial Transactions - Rithm Property Trust completed a strategic transaction on June 11, 2024, selling $14.0 million of common stock to Rithm at $4.87 per share[177]. - The company issued 2,084,232 shares of Series C Preferred Stock, generating total net proceeds of $50.8 million[234]. Market Conditions - The overall Consumer Price Index (CPI) rose to 3.0% in September 2025, up from 2.7% in June 2025, indicating increased inflation pressures[185]. - The unemployment rate increased to 4.3% in August 2025, up from 4.1% in June 2025, reflecting a slight loosening in the labor market[187]. - The nominal 10-year Treasury yield declined to 4.15% at the end of September 2025, down from 4.23% at the end of June 2025[186]. - The commercial real estate market is showing signs of stabilization, with improved sentiment and disciplined underwriting practices[189]. Company Strategy - The company has shifted its strategic focus towards investments in the commercial real estate (CRE) sector and has begun investing in commercial mortgage-backed securities (CMBS)[181]. - Rithm Property Trust is positioned to capitalize on emerging dislocations in the market, providing liquidity where traditional lenders are cautious[196]. - The company expects limited ability to acquire significant new commercial mortgage assets in the near future due to financial challenges[197]. Financial Performance - Net interest income increased by $0.3 million for the three months and by $6.3 million for the nine months ended September 30, 2025, compared to the same periods in 2024, primarily due to reinvesting proceeds from sales of residential mortgage loans and RMBS into CMBS with a higher net interest margin[210]. - Interest income for the three months ended September 30, 2025, was $13,424,000, an increase of $1,076,000 from $12,348,000 in the same period of 2024[211]. - Interest expense for the three months ended September 30, 2025, was $9,436,000, an increase of $776,000 from $8,660,000 in the same period of 2024[211]. - Total expenses decreased by $1.2 million for the three months ended September 30, 2025, compared to the same period in 2024, primarily due to lower general and administrative expenses[215]. - Total expenses decreased by $24.4 million for the nine months ended September 30, 2025, compared to the same period in 2024, primarily due to a $17.2 million decrease in management fee expense[216]. - General and administrative expenses for the nine months ended September 30, 2025, were $2.9 million, down from $7.96 million in 2024, reflecting a year-over-year variance of $5.06 million[217]. - The total gain on revenue turned positive at $543 thousand in September 2025, compared to a loss of $11.870 million in the same period of 2024[252]. Asset and Liability Management - As of September 30, 2025, the carrying value of mortgage loans held-for-sale was $372.9 million, down from $396.1 million at the end of 2024[183]. - The average carrying value of the mortgage loan portfolio decreased by $223,233,000 for the nine months ended September 30, 2025, compared to the same period in 2024, primarily due to loan sales and paydowns[213]. - The average carrying value of CMBS and RMBS increased by $176,377,000 for the nine months ended September 30, 2025, compared to the same period in 2024[213]. - The average carrying value of repurchase financing agreements increased by $59,581,000 for the nine months ended September 30, 2025, compared to the same period in 2024[213]. - The ending carrying value of mortgage loans held-for-investment, net, was $372.87 million as of September 30, 2025, down from $403.06 million at the end of 2024[225]. - Total assets decreased from $505.465 million on December 31, 2024, to $288.554 million on September 30, 2025, representing a decline of approximately 43%[252]. - Total liabilities decreased from $414.773 million to $186.650 million, a reduction of about 55%[252]. - Total equity increased by $11.2 million, from $90.692 million at the end of 2024 to $101.904 million by September 30, 2025[252]. Credit and Risk Management - The net loss attributable to common stockholders for the three months ended September 30, 2025, was $(1,559,000), a decrease of $6,470,000 compared to $(8,029,000) in the same period of 2024[209]. - The net loss attributable to Rithm Property Trust Inc. for the three months ended September 30, 2025, was $(273,000), a decrease of $7,756,000 compared to $(8,029,000) in the same period of 2024[209]. - The net change in the allowance for credit losses was $0 for the three months ended September 30, 2025, compared to a loss of $(857,000) in the same period of 2024[209]. - The allowance for credit losses on mortgage loans held-for-investment was $0 for the nine months ended September 30, 2025, compared to $5.1 million for the same period in 2024[220]. - The current delinquency rate for the loan portfolio was 78.1% as of September 30, 2025, compared to 76.7% at the end of 2024[229]. - The company has no material exposure to market, credit, liquidity, or financing risk from unconsolidated entities or financial partnerships[253]. - Interest rate increases could lead to higher costs of funds for new secured bonds and repurchase lines of credit, impacting overall financing expenses[256]. - The company is actively managing risks related to real estate, interest rates, prepayment, and credit to maintain capital levels consistent with those risks[255]. - Inflation risks may affect disposable household income and increase credit risk for certain borrowers, impacting overall asset performance[263]. Cash Flow and Liquidity - As of September 30, 2025, the total cash and cash equivalents were $81.4 million[232]. - Net cash used in operating activities decreased by $10.2 million year-over-year, totaling $(7,465) thousand for the nine months ended September 30, 2025[244]. - Net cash provided by investing activities decreased by $426.9 million year-over-year, totaling $1,384 thousand for the nine months ended September 30, 2025[245]. - Net cash from financing activities increased by $424.1 million year-over-year, totaling $24,199 thousand for the nine months ended September 30, 2025[246]. - Dividends declared in the nine months ended September 30, 2025, were $8.2 million on Common Stock, with an additional $2.9 million accrued on Series C Preferred Stock[249]. - The company must distribute at least 90% of its REIT taxable income annually to maintain its REIT status[235]. - The company expects to meet its long-term liquidity requirements through cash on hand and potential additional borrowings[242]. - The company is subject to debt covenants requiring a minimum liquidity of $30.0 million and a tangible net worth of $240.0 million[238].

Financial Performance - GAAP comprehensive loss for Q3 2025 was $(0.4) million, or $(0.01) per diluted common share, compared to a comprehensive income of $1.4 million in Q2 2025[5] - Earnings available for distribution were $(0.7) million, or $(0.02) per diluted common share, down from $0.1 million in Q2 2025[2] - The company reported a net loss attributable to common stockholders of $(1.559) million in Q3 2025, compared to a net income of $0.612 million in Q2 2025[9] Dividends - The company paid a common dividend of $2.7 million, maintaining a dividend of $0.06 per share[5] Income and Assets - Net interest income decreased to $3.988 million in Q3 2025 from $4.213 million in Q2 2025[9] - Total assets as of September 30, 2025, were $1,003.093 million, a decrease from $1,014.373 million at the end of Q2 2025[10] - Total liabilities decreased to $711.590 million from $719.784 million in the previous quarter[10] - The book value per common share was $5.30 as of September 30, 2025[5] - The weighted average number of diluted shares outstanding was 45,422,527 for Q3 2025[9] Strategic Direction - Rithm Property Trust is transitioning to a flexible commercial real estate investment strategy as part of a strategic transaction with Rithm Capital for 2024[21] - The company has historically focused on acquiring and managing re-performing and non-performing loans secured by single-family residences and commercial properties[21] - Rithm Property Trust is organized as a Maryland corporation to qualify as a real estate investment trust (REIT) for federal income tax purposes[21] Upcoming Events - The company will host a conference call on October 31, 2025, to discuss these financial results[7]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to 001-36844 (Commission file number) RITHM PROPERTY TRUST INC. (Exact name of registrant as specified in its charter) Maryland 46-5211870 (I.R.S. Employer Ide ...

[Executive Summary & Financial Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Financial%20Highlights) [CEO Commentary](index=1&type=section&id=CEO%20Commentary) Michael Nierenberg, CEO of Rithm Capital, highlighted Q2 2025 as a pivotal quarter for Rithm Property Trust, emphasizing the establishment of a foundation for core investment portfolio growth, supported by a robust pipeline and disciplined investment approach - CEO Michael Nierenberg stated **Q2 2025 was a pivotal quarter**, laying the foundation for core investment portfolio growth[2](index=2&type=chunk) - The company is well-positioned for sustained value delivery to shareholders, citing a robust pipeline, disciplined investment approach, and focused team[2](index=2&type=chunk) [Key Financial Metrics Overview](index=1&type=section&id=Key%20Financial%20Metrics%20Overview) Rithm Property Trust reported GAAP comprehensive income of $1.4 million ($0.03 per diluted share) and non-GAAP earnings available for distribution of $0.1 million ($0.00 per diluted share) for Q2 2025, with book value per common share at $5.37 and a common dividend of $0.06 per share paid Summary of Operating Results (Q2 2025 vs Q1 2025) | Metric | Q2 2025 | Q1 2025 | Change (QoQ) | | :------------------------------------ | :------ | :------ | :----------- | | Comprehensive Income per Diluted Share | $0.03 | $0.02 | +$0.01 | | Comprehensive Income (in millions) | $1.4 | $1.1 | +$0.3 | | EAD per Diluted Common Share | $0.00 | $0.02 | -$0.02 | | EAD (in millions) | $0.1 | $0.7 | -$0.6 | | Book Value per Common Share | $5.37 | $5.40 | -$0.03 | | Book Value (in millions) | $244.0 | $245.3 | -$1.3 | | Common Dividend per Share | $0.06 | $0.06 | No Change | | Common Dividend (in millions) | $2.7 | $2.8 | -$0.1 | - GAAP comprehensive income was **$1.4 million**, or **$0.03 per diluted common share**, for Q2 2025[4](index=4&type=chunk) - Earnings available for distribution (non-GAAP) was **$0.1 million**, or **$0.00 per diluted common share**, for Q2 2025[4](index=4&type=chunk) [Financial Statements](index=3&type=section&id=Financial%20Statements) [Consolidated Statements of Operations](index=3&type=section&id=Consolidated%20Statements%20of%20Operations) For Q2 2025, Rithm Property Trust reported a net income of $1.9 million, a significant improvement from a net loss of $3.4 million in Q1 2025, driven by an increase in net interest income and substantial unrealized gains on mortgage loans held-for-sale, net, offsetting higher expenses Consolidated Statements of Operations (Q2 2025 vs Q1 2025) | Metric (in thousands) | June 30, 2025 | March 31, 2025 | Change (QoQ) | | :------------------------------------ | :------------ | :------------- | :----------- | | Net Interest Income | $4,213 | $3,814 | +$399 | | Total Expense | $3,961 | $3,753 | +$208 | | Total Other Income (Loss) | $1,673 | $(3,588) | +$5,261 | | Income (Loss) before Income Taxes | $1,925 | $(3,527) | +$5,452 | | Net Income (Loss) | $1,899 | $(3,391) | +$5,290 | | Net Income (Loss) Attributable to Common Stockholders | $612 | $(3,744) | +$4,356 | | Comprehensive Income | $1,393 | $1,114 | +$279 | | Diluted Net Income (Loss) per Share | $0.01 | $(0.08) | +$0.09 | | Diluted Comprehensive Income per Share | $0.03 | $0.02 | +$0.01 | - Net income attributable to common stockholders improved significantly from a loss of **$3,744 thousand** in Q1 2025 to a gain of **$612 thousand** in Q2 2025[11](index=11&type=chunk) - Unrealized gain on mortgage loans held-for-sale, net, increased substantially from **$970 thousand** in Q1 2025 to **$2,519 thousand** in Q2 2025[11](index=11&type=chunk) [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets decreased slightly to $1,014.4 million from $1,028.3 million at March 31, 2025, primarily due to a decrease in mortgage loans held-for-investment and other investments, alongside a reduction in total liabilities Consolidated Balance Sheets (June 30, 2025 vs March 31, 2025) | Metric (in thousands) | June 30, 2025 | March 31, 2025 | Change (QoQ) | | :------------------------------------ | :------------ | :------------- | :----------- | | Total Assets | $1,014,373 | $1,028,331 | $(13,958) | | Cash and cash equivalents | $98,629 | $97,439 | +$1,190 | | Mortgage loans held-for-investment, net | $378,894 | $386,997 | $(8,103) | | Total Liabilities | $719,784 | $732,411 | $(12,627) | | Secured bonds payable, net | $241,764 | $250,903 | $(9,139) | | Repurchase financing agreements | $362,502 | $367,010 | $(4,508) | | Stockholders' Equity in Rithm Property Trust Inc. | $294,739 | $296,071 | $(1,332) | - Total assets decreased by approximately **$13.96 million** quarter-over-quarter, primarily driven by a reduction in mortgage loans held-for-investment[12](index=12&type=chunk) - Total liabilities decreased by approximately **$12.63 million**, mainly due to reductions in secured bonds payable and repurchase financing agreements[12](index=12&type=chunk) [Non-GAAP Financial Measures](index=5&type=section&id=Non-GAAP%20Financial%20Measures) [Explanation of Earnings Available for Distribution (EAD)](index=5&type=section&id=Explanation%20of%20Earnings%20Available%20for%20Distribution%20(EAD)) Earnings available for distribution (EAD) is a non-GAAP measure used by management to assess operating performance by excluding net realized and unrealized gains/losses on certain assets/liabilities and other non-investment portfolio related income/losses, aiming to highlight the core operating results of the Company's investment portfolio - EAD is a non-GAAP measure used to evaluate operating performance by excluding net realized/unrealized gains/losses and other non-investment portfolio related income/losses[13](index=13&type=chunk)[15](index=15&type=chunk) - Management believes EAD helps investors and analysts track the core operating performance of the Company's assets and compare results between periods[17](index=17&type=chunk) - EAD is not a substitute for GAAP comprehensive income or cash flows from operating activities and is one metric used by the board to determine common stock dividends, but not an exclusive indicator of taxable income or dividend amounts[18](index=18&type=chunk) [Reconciliation to GAAP Comprehensive Income](index=6&type=section&id=Reconciliation%20to%20GAAP%20Comprehensive%20Income) The reconciliation shows that Earnings Available for Distribution decreased significantly from $717 thousand in Q1 2025 to $134 thousand in Q2 2025, despite an increase in GAAP comprehensive income, primarily due to higher negative adjustments for realized and unrealized gains in Q2 Reconciliation of GAAP Comprehensive Income to EAD (Q2 2025 vs Q1 2025) | Metric (in thousands) | June 30, 2025 | March 31, 2025 | Change (QoQ) | | :------------------------------------ | :------------ | :------------- | :----------- | | Comprehensive income — GAAP | $1,393 | $1,114 | +$279 | | Net income attributable to noncontrolling interest | $1 | $3 | -$2 | | Realized and unrealized gains | $(1,265) | $(317) | $(948) | | Other adjustments | $5 | $(83) | +$88 | | Earnings Available for Distribution — Non-GAAP | $134 | $717 | $(583) | | Diluted EAD per common share | $0.00 | $0.02 | -$0.02 | - Earnings Available for Distribution (Non-GAAP) decreased from **$717 thousand** in Q1 2025 to **$134 thousand** in Q2 2025[19](index=19&type=chunk) - The adjustment for realized and unrealized gains significantly impacted EAD, moving from **$(317) thousand** in Q1 2025 to **$(1,265) thousand** in Q2 2025[19](index=19&type=chunk) [Company Information & Disclosures](index=2&type=section&id=Company%20Information%20%26%20Disclosures) [Additional Information & Conference Call Details](index=2&type=section&id=Additional%20Information%20%26%20Conference%20Call%20Details) Rithm Property Trust directs investors to its website for additional presentations and announced an earnings conference call for July 24, 2025, at 5:00 PM ET, with webcast and replay options available - Additional investor information, including presentations, is available on the Company's website: www.rithmpropertytrust.com[7](index=7&type=chunk) - An earnings conference call to review Q2 2025 financial results will be held on Thursday, July 24, 2025, at 5:00 PM Eastern Time, with a webcast and replay available[8](index=8&type=chunk)[9](index=9&type=chunk) [Cautionary Note Regarding Forward-Looking Statements](index=7&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) The press release contains forward-looking statements subject to inherent uncertainties and risks, and the Company disclaims any obligation to update them, except as required by law, advising investors to refer to SEC filings for a discussion of risks - The press release includes forward-looking statements, identified by words like 'may,' 'will,' 'expects,' and 'anticipates,' which are subject to inherent uncertainties and risks beyond the Company's control[21](index=21&type=chunk) - The Company disclaims any obligation to publicly update or revise forward-looking statements, except as legally required, and advises investors to consult SEC filings for risk factors[21](index=21&type=chunk) [About Rithm Property Trust](index=7&type=section&id=About%20Rithm%20Property%20Trust) Rithm Property Trust is a real estate investment platform managed by an affiliate of Rithm Capital Corp, which has transitioned its investment strategy to focus on flexible commercial real estate and operates as a REIT for federal income tax purposes - Rithm Property Trust is a real estate investment platform externally managed by an affiliate of Rithm Capital Corp[22](index=22&type=chunk) - The Company transitioned to a flexible commercial real estate focused investment strategy in connection with a 2024 strategic transaction with Rithm Capital[22](index=22&type=chunk) - Rithm Property Trust is organized to qualify as a real estate investment trust (REIT) for federal income tax purposes[22](index=22&type=chunk) [Investor Relations](index=7&type=section&id=Investor%20Relations) Contact information for Investor Relations is provided for inquiries - Investor Relations can be reached at **646-868-5483** or ir@rithmpropertytrust.com[23](index=23&type=chunk)

Financial Transactions - Rithm Property Trust completed a strategic transaction on June 11, 2024, selling $14.0 million of common stock to Rithm at $4.87 per share, and terminated the existing management contract with the Former Manager for approximately 3.2 million shares and $0.6 million in cash[148]. - During the quarter ended March 31, 2025, the company issued 2,084,232 shares of 9.875% Series C Preferred Stock, generating total net proceeds of $50.8 million after expenses[198]. Portfolio and Asset Management - As of March 31, 2025, the carrying value of the portfolio was $921.9 million, with mortgage loans held-for-investment at $387.0 million and CMBS at fair value of $275.5 million[154]. - The average mortgage loan portfolio decreased to $417.193 million from $898.343 million, a reduction of $481.150 million year-over-year[184]. - The total unpaid principal balance (UPB) of the loan portfolio as of March 31, 2025, was $443,743,000, a decrease from $454,893,000 as of December 31, 2024, reflecting a decline of about 2.4%[191]. - The number of loans in the portfolio decreased from 2,625 as of December 31, 2024, to 2,575 as of March 31, 2025, indicating a reduction of approximately 1.9%[191]. - The market value of collateral for the loan portfolio as of March 31, 2025, was $1,150,581,000, down from $1,160,673,000 as of December 31, 2024[195]. Financial Performance - Net interest income for the three months ended March 31, 2025, was $3.814 million, an increase of $2.182 million from $1.632 million in the same period of 2024[177]. - Interest income decreased to $13.200 million from $15.738 million year-over-year, a decline of $2.538 million[181]. - Interest expense decreased significantly to $9.386 million from $14.106 million, resulting in a year-over-year improvement of $4.720 million[177]. - Total revenue for the three months ended March 31, 2025, was $249 thousand, compared to a loss of $49.381 million in the same period of 2024, reflecting a positive variance of $49.630 million[177]. - The company experienced a net loss attributable to common stockholders of $3.744 million for the three months ended March 31, 2025, a significant improvement from a loss of $74.319 million in the same period of 2024[177]. Expenses and Liabilities - Total expenses decreased by $19.9 million to $3.776 million for the three months ended March 31, 2025, primarily due to a reduction in management fees[187]. - The company recorded no allowance for credit losses in the three months ended March 31, 2025, compared to an allowance of $4.230 million in the same period of 2024[179]. - Total liabilities decreased to $187.7 million from $414.8 million, while total equity increased to $111.2 million[216]. Economic Indicators - The U.S. economy contracted by an annualized 0.3% in Q1 2025, with the unemployment rate slightly increasing to 4.2%[155]. - The 12-month increase in the Consumer Price Index (CPI) was 2.4% in March 2025, down from 2.9% in December 2024, indicating progress towards lower inflation[156]. - The nominal 10-year Treasury yield fell to 4.23% at the end of March 2025 from 4.58% in December 2024, reflecting lower real yields from TIPS[158]. - Average payroll growth was 152,000 jobs per month in Q1 2025, compared to 168,000 jobs per month in 2024, with year-over-year growth in average hourly earnings at 3.8%[159]. - Total home sales averaged 4.81 million units in Q1 2025, only slightly lower than the previous quarter, with median resale price growth at 2.7%[160]. Market Conditions - The commercial real estate market is experiencing a turnaround, supported by improved liquidity and sentiment, although uncertainty remains due to trade tensions[162]. - The company does not expect to acquire significant new commercial mortgage assets in the near future due to financial challenges and limited financing sources[165]. - The company is subject to various market risks, including interest rate risk, credit risk, and real estate risk, which may impact financial performance[219]. Cash and Liquidity - The total cash and cash equivalents at March 31, 2025, were reported at $97.4 million[196]. - Cash and cash equivalents at the end of the period were $97.4 million, a decrease of $2.6 million compared to the previous year[208]. - Net cash used in operating activities decreased by $6.6 million year-over-year, primarily due to lower interest and other expenses[209]. - Net cash from investing activities decreased by $108.7 million, mainly due to increased purchases of investments in CMBS and equity method investments[210]. - Net cash from financing activities increased by $88.1 million, primarily due to the issuance of Series C Preferred Stock[211]. - The company expects to meet long-term liquidity requirements through cash on hand and potential additional borrowings[207]. - The company is required to maintain a minimum liquidity of $30.0 million and tangible net worth of $240.0 million, with a maximum leverage ratio of 4.0 to 1.0[202].

Financial Performance - Comprehensive income for Q1 2025 was $1.1 million, or $0.02 per diluted common share, down from $2.2 million, or $0.05 per diluted common share in Q4 2024[4] - Earnings available for distribution increased to $0.7 million, or $0.02 per diluted common share, compared to $0.3 million, or $0.01 per diluted common share in the previous quarter[4] - The company reported a net loss attributable to common stockholders of $3.7 million for Q1 2025, compared to a net income of $2.9 million in Q4 2024[14] - Comprehensive income for Q1 2025 was $1,114,000, compared to $2,202,000 for Q4 2024[23] - Earnings Available for Distribution (Non-GAAP) increased to $717,000 in Q1 2025 from $323,000 in Q4 2024[23] - Basic and diluted Earnings Available for Distribution per common share were both $0.02 in Q1 2025, up from $0.01 in Q4 2024[23] Equity and Assets - Book value per common share slightly decreased to $5.40 from $5.44 in Q4 2024, with total equity rising to $295.9 million from $246.9 million[4] - Total assets increased to $1,028.3 million from $977.3 million, with cash and cash equivalents rising to $97.4 million from $64.3 million[16] - The weighted average shares outstanding for basic and diluted calculations were 45,422,030 in Q1 2025, slightly up from 45,298,505 in Q4 2024[23] Dividends and Investments - The company declared a cash dividend of $0.06 per share, totaling $2.7 million, consistent with the previous quarter[8] - The company deployed $64 million into commercial real estate investments, including $46.7 million in commercial mortgage-backed securities, bringing total CMBS investments to $274.6 million[12] - Issued 2,084,232 shares of 9.875% Series C Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock for net proceeds of $50.8 million[12] - Sold legacy RMBS with a total unpaid principal balance of $20.7 million, resulting in a remaining RMBS portfolio of $101.1 million[12] Income and Interest - Interest income for Q1 2025 was $13.2 million, an increase from $12.9 million in Q4 2024, while net interest income rose to $3.8 million from $3.6 million[14] Strategic Direction - Rithm Property Trust has transitioned to a flexible commercial real estate investment strategy following a strategic transaction with Rithm Capital in 2024[25] - The company focuses on acquiring, investing in, and managing re-performing and non-performing loans secured by residential and commercial properties[25] Forward-Looking Statements - Forward-looking statements indicate management's expectations regarding future events, highlighting inherent uncertainties[26] - The company disclaims any obligation to update or revise forward-looking statements except as required by law[26] Investor Relations - Investor relations contact is available for further inquiries at 646-868-5483 or ir@rithmpropertytrust.com[27]

Strategic Transactions and Management Changes - The company completed a strategic transaction with Rithm on June 11, 2024, involving the sale of $14.0 million of common stock at a price of $4.87 per share[21]. - The company terminated its existing management contract with the former manager in exchange for approximately 3.2 million shares of common stock and $0.6 million in cash[21]. - The management agreement with RCM GA is effective until June 11, 2027, with automatic renewals for successive two-year terms[42]. - The company disposed of its interest in Great Ajax FS LLC and assigned servicing agreements to Newrez as part of the strategic transaction[22]. Investment Strategy and Asset Management - The company shifted its investment strategy to focus on originating and acquiring loans and securities collateralized by various commercial real estate assets, moving away from RPLs and NPLs[26]. - The new investment strategy includes targeting senior loans, subordinated debt, mezzanine loans, preferred equity, and commercial mortgage servicing rights[27]. - The company anticipates financing its strategy through various options, including borrowing under credit facilities and issuing commercial real estate collateralized loan obligations[28]. - The investment guidelines adopted by the board allow for changes in target asset classes without stockholder approval[31]. - The company does not currently hedge the risk associated with its investment portfolio but may undertake risk mitigation activities in the future[36]. Financial Performance and Risks - The company incurred a net loss attributable to common stockholders of $92.2 million for the year ended December 31, 2024[82]. - The market value of the company's residential and commercial mortgage loans has significantly deteriorated, leading to substantial operating losses[82]. - Higher historical interest rates are expected to continue negatively impacting the company's loan assets, extending duration and decreasing fair market value[83]. - The company has identified certain mortgage loans for potential sale, but unfavorable market conditions may result in losses upon sale[84]. - The company may face significant liabilities related to environmental contamination at properties it owns or acquires[74]. Compliance and Regulatory Risks - The company intends to qualify as a REIT and must distribute at least 90% of its current taxable income each year to avoid federal income tax[64]. - The company conducts operations to avoid registration as an investment company under the Investment Company Act, ensuring less than 40% of total assets consist of investment securities[66]. - The company monitors compliance with the Investment Company Act to ensure subsidiaries meet applicable exemptions or exclusions[69]. - Regulatory compliance is critical for the Servicer, and any failure could increase expenses and adversely affect results[147]. - The Dodd-Frank Act has introduced significant regulatory changes that impact the financial services industry, including enhanced regulations for mortgage lending and servicing[186]. Market Conditions and Economic Factors - The overall level of commercial mortgage loan defaults remains significant, with many underlying commercial real estate market values distressed[93]. - The company is exposed to risks from weather conditions and natural disasters, which could materially impact asset values and financial performance[95]. - Difficult conditions in the mortgage and real estate markets have adversely affected asset values and are expected to persist in the foreseeable future[100]. - Changes in underwriting standards by Freddie Mac, Fannie Mae, or FHA could adversely affect the company's ability to refinance mortgage loans, impacting business operations[113]. Conflicts of Interest and Management Challenges - Conflicts of interest may arise between the company and its New Manager, potentially leading to decisions that prioritize incentive compensation over capital preservation[199]. - The Servicing Agreements are not negotiated at arm's length, which may result in less favorable terms compared to agreements with unaffiliated third parties[201]. - Rithm's investment policy allows for significant latitude in asset selection, which may lead to investments with lower returns or higher risks than anticipated[209]. - The complexity of managing conflicts of interest may lead to regulatory scrutiny or litigation, negatively impacting Rithm's business and financial condition[208]. Financial Strategies and Risks - The company uses leverage to enhance financial returns, but this increases both potential gains and losses, impacting cash available for distribution to stockholders[168]. - The company's financing strategy relies on placing debt at rates that provide a positive net spread; widening spreads could severely restrict future financings[162]. - The company may pursue various hedging strategies to reduce exposure to adverse interest rate changes, but these strategies can be expensive and may not provide the intended protection[179]. - The inability to refinance short-term facilities may require the company to seek less attractive financing options or liquidate assets at unfavorable times[176].

Financial Performance - GAAP net income for Q4 2024 was $2.9 million, or $0.06 per diluted share, compared to a loss of $8.0 million in Q3 2024[3] - Earnings available for distribution for Q4 2024 were $0.3 million, or $0.01 per diluted common share, up from a loss of $5.4 million in Q3 2024[3] - The company stabilized its book value and achieved positive earnings growth from a loss of $12.7 million in Q2 2024 to a net income of $2.9 million in Q4 2024[4] - Net income attributable to common stockholders for the three months ended December 31, 2024, was $2.914 million, compared to a loss of $8.029 million for the previous quarter[23] - Earnings available for distribution (EAD) for the same period was $323,000, a significant improvement from a loss of $5.360 million in the prior quarter[23] - Basic and diluted earnings available for distribution per common share were both $0.01 for the three months ended December 31, 2024, compared to a loss of $0.12 per share in the previous quarter[23] Asset and Liability Management - Total assets decreased to $977.3 million as of December 31, 2024, down from $1.3 billion a year earlier[15] - Total liabilities were reported at $730.6 million, a decrease from $1.0 billion at the end of 2023[15] - Book value per common share decreased slightly to $5.44 at December 31, 2024, from $5.47 at September 30, 2024[3] Dividend Declaration - The company declared a cash dividend of $0.06 per share, totaling $2.8 million, to be paid on February 28, 2025[6] Investment Strategy - The company acquired $154 million in UPB of commercial mortgage-backed securities, increasing total investment in CMBS to $244 million[10] - The transition to a commercial real estate-focused investment strategy was highlighted following the rebranding to Rithm Property Trust on December 2, 2024[10] Earnings Distribution Policy - The company views earnings available for distribution as a consistent financial measure of its portfolio's ability to generate income for distribution to common stockholders[21] - To maintain qualification as a REIT, the company is required to distribute at least 90% of its REIT taxable income annually[21] - Management excludes certain realized and unrealized losses from earnings available for distribution as they are not considered part of the company's core operations[20] Strategic Transactions - The company reported unrealized losses of $1.516 million for the quarter ended December 31, 2024, compared to unrealized gains of $1.640 million in the prior quarter[23] - The company incurred $1.010 million in expenses related to a strategic transaction during the previous quarter[23] - The strategic transaction with Rithm Capital involved a management agreement with an affiliate to serve as the external manager for Rithm Property Trust[23]

Core Insights - The article discusses the investment landscape in the real estate sector, particularly focusing on the performance and potential of various real estate investment trusts (REITs) and related securities [2][3]. Group 1: Company Insights - Hoya Capital Research & Index Innovations is affiliated with Hoya Capital Real Estate, providing investment advisory services and market commentary focused on publicly traded securities in the real estate industry [2]. - The commentary emphasizes the importance of consulting with investment, tax, or legal advisers before making investment decisions, highlighting the complexities involved in real estate investments [2]. Group 2: Industry Insights - The article notes that investments in real estate companies and housing industry companies carry unique risks, which may not be suitable for all investors [2]. - It mentions that past performance of market data does not guarantee future results, indicating the volatile nature of the real estate market [3].

Market Risks - The primary market risks include real estate risk, interest rate risk, prepayment risk, and credit risk, which the company actively manages [268]. - Increases in interest rates are expected to lower refinancing volume and potentially increase defaults on CMBS, while home price increases may slow down [269]. - Higher interest rates could lead to a decline in the value of real estate assets and net income if not accompanied by increases in loan yield and rental yield [273]. - Prepayment risk is influenced by various factors, including interest rates and borrower behavior, which can affect the yield on assets and reinvestment opportunities [274]. - Credit risk is present due to potential borrower defaults, which may arise from personal income reductions, job loss, or poor property management [276]. - Inflation and interest rate increases by the Federal Reserve have raised the company's cost of funds, impacting the value of residential mortgage assets [277]. Financial Management - The company plans to continue securitizing whole loan portfolios to create long-term, fixed-rate financing, while utilizing repurchase lines of credit as interim financing [271]. - The company has not experienced any material changes in internal control over financial reporting during the last fiscal quarter [281]. - There are no material pending legal or regulatory proceedings involving the company or its subsidiaries [283]. - No material changes to risk factors were reported for the three months ended September 30, 2024 [284].