Rithm Capital Corp. Q1 2026 10-Q Summary
Business Context and Reporting Period
This report covers the quarterly period ended March 31, 2026. Rithm Capital Corp. is a global alternative asset manager and internally managed REIT operating through five segments: Origination and Servicing, Residential Transitional Lending, Asset Management, Investment Portfolio, and Commercial Real Estate. The quarter included the first full quarter of operations for the recently acquired Elecor (formerly Paramount Group) and Crestline Management platforms.
Key Financial Metrics
| Metric | Q1 2026 | Q1 2025 |
|---|---|---|
| Total Revenue | $1,380.2 million | $976.9 million |
| Net Income | $109.5 million | $80.7 million |
| Net Income Attributable to Common Stockholders | $67.8 million | $36.5 million |
| Diluted EPS (Common) | $0.12 | $0.07 |
| Total Assets | $53.4 billion | $53.1 billion (Dec 31, 2025) |
| Total Liabilities | $43.9 billion | $43.8 billion (Dec 31, 2025) |
| Cash and Cash Equivalents | $1.6 billion | $1.8 billion (Dec 31, 2025) |
| Outstanding Debt | $35.4 billion | $35.2 billion (Dec 31, 2025) |
Material Changes vs. Prior Period
- Revenue Growth: Total revenue increased 41% year-over-year (YoY) to $1.38 billion, driven primarily by a full quarter of rental revenue from the Elecor acquisition ($171.2 million) and increased asset management fees from Crestline.
- Servicing Revenue: Net servicing revenue rose to $375.1 million (up 58% YoY), largely due to a $193.7 million improvement in hedged MSR mark-to-market values driven by lower discount rates, partially offset by higher realization of cash flows.
- Origination Volume: Funded loan production was $15.5 billion, a 31% increase YoY, with refinance activity comprising 49% of volume.
- Expense Increases: General, administrative, and operating expenses increased 58% YoY to $336.0 million, primarily due to property and maintenance costs associated with the new Commercial Real Estate segment.
- Equity Activity: The Company issued 10 million shares of Series F Preferred Stock in January 2026, raising approximately $242.1 million.
Guidance, Outlook, and Risks
Management Commentary: Management views the current environment as constructive, citing dislocation and refinancing-driven activity creating entry points across the capital stack. The flatter yield curve is noted to compress net interest margins for leveraged strategies, favoring Rithm's flexible, multi-strategy approach.
Market Outlook: The outlook for 2026 anticipates continued normalization in the CRE market with outcomes differentiated by asset quality. Inflation concerns remain due to energy price volatility linked to geopolitical conflicts (specifically Iran), and the Federal Reserve maintained the federal funds target range at 3.50%–3.75%.
Key Risks:
- Interest Rate & Prepayment Risk: Significant exposure to changes in interest rates and prepayment speeds affecting the fair value of MSRs and loans.
- Liquidity & Margin Calls: The Company has margin exposure on $13.9 billion of secured financing agreements; declines in collateral value could trigger margin calls impacting liquidity.
- Integration Risk: Risks associated with integrating recent acquisitions (Elecor, Crestline) and realizing expected synergies.
- Regulatory & REIT Status: Risks related to maintaining REIT qualification and compliance with extensive federal and state regulations.
Investor Verification Checklist
- Debt Maturities: Verify the $15.1 billion in debt maturing within the next 12 months and the Company's refinancing strategy.
- MSR Valuation Sensitivity: Review the sensitivity analysis in Note 18 regarding the impact of discount rate and prepayment rate shifts on the $10.9 billion MSR portfolio.
- Elecor Performance: Monitor the occupancy rates and lease expirations for the newly acquired Class A office portfolio (85.7% same-store occupancy as of March 31, 2026).
- Margin Exposure: Assess the $13.9 billion of secured financing agreements subject to margin calls and the Company's cash reserves to meet potential calls.
- Consumer Loan Credit Quality: Review the 90+ day delinquency rates for the Marcus loan portfolio (55.9% as of March 31, 2026) and associated credit loss provisions.