RPT(RPT) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported GAAP earnings of $2.5 million for Q4, with earnings available for distribution (EAD) at approximately -$500,000, leading to a per diluted share of $0.06 [8] - The company has a negative book value of about $300 million, or $31 per diluted share, and a common stock dividend yield of 8.7% [9] - The company holds around $100 million in cash and liquidity, with total equity in the vehicle at $300 million [7] Business Line Data and Key Metrics Changes - The company is focused on acquiring multifamily loans from its operating business, Genesis, which is projected to produce between $6 billion and $7 billion in loans this year [11] - The company aims to grow earnings to between $1.60 and $1.70 per share, contingent on a recapitalization of the vehicle [5][11] Market Data and Key Metrics Changes - The company is currently trading at roughly 50% of its book value, with stock prices fluctuating between $15 and $16 following a 6-to-1 reverse stock split [4][7] - The commercial real estate sector is experiencing dislocation, with many REITs and BDCs trading poorly, which presents potential opportunities for the company [9][10] Company Strategy and Development Direction - The company plans to reposition itself as a dedicated commercial real estate vehicle and an opportunistic investment vehicle, focusing on capital formation and earnings growth [4][5] - The strategy includes acquiring multifamily loans and expanding into commercial real estate investments, with a focus on opportunistic acquisitions [12][14] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the potential for earnings growth and the ability to attract third-party capital, while remaining cautious about market conditions [10][29] - The company is committed to maintaining a clean balance sheet and is patient in its approach to recapitalization, aiming to avoid dilutive actions [10][29] Other Important Information - The company has identified a pool of approximately $1 billion in assets that could be added to the vehicle, subject to board approvals, which would lead to an immediate increase in earnings [30] - Management highlighted the importance of credit quality in sourcing loans, emphasizing a balanced approach between internal and third-party loan origination [39][40] Q&A Session Summary Question: Will RPT receive a slice of the NOI from the Paramount transaction? - Management indicated that RPT has $50 million of the Paramount deal on its balance sheet, and earnings will be pro rata based on Rithm's performance [19] Question: Are there plans to explore more loans from Genesis? - Management confirmed that Genesis is expected to produce $6 billion to $7 billion in loans, and successful capital raises would allow for loans to be added directly to the balance sheet, enhancing earnings [20] Question: Is there a tolerance for finding other sources of capital? - Management acknowledged the potential for third-party capital to be introduced, but emphasized the importance of timing and market conditions [28] Question: What types of loans will be prioritized? - Management stated that the primary focus will be on multifamily loans generated by Genesis, which are expected to be highly accretive [30] Question: Is there an opportunity to acquire from banks? - Management noted that there is currently limited bank selling, but the demand for Genesis's products remains strong, creating opportunities for growth [41]