Rithm Capital Corp. current report, 17 June 2022

Full document

Business Context and Reporting Period

This Form 8-K, dated June 17, 2022, reports a material corporate restructuring by New Residential Investment Corp. (NRZ). The Company announced the internalization of its management function, terminating its long-standing agreement with external manager FIG LLC. Concurrently, the Company announced plans to change its name to Rithm Capital Corp., effective on or about August 1, 2022.

Key Financial Metrics and Agreements

This filing details specific financial commitments related to the management transition rather than operational performance metrics.

  • Termination Payment: The Company agreed to pay $400 million to FIG LLC to terminate the Management and Advisory Agreement.
  • Payment Schedule: $200 million paid on the Effective Date (June 17, 2022); $100 million payable on September 15, 2022; and $100 million payable on December 15, 2022.
  • Adjustments: The final payments are subject to deductions for the pre-Internalization portion of certain 2022 annual bonuses payable by the Manager to the Company.
  • Transition Services: The Manager will provide services at cost (including overhead, wages, and rent) until the Company procures alternatives or until December 31, 2022.

Material Changes Versus Prior Period

The primary material change is the shift from an externally managed structure to an internally managed Real Estate Investment Trust (REIT). This marks the end of a management relationship that began following the Company's spin-off from Drive Shack Inc. in 2013. The Company is also transitioning its corporate identity from New Residential Investment Corp. to Rithm Capital Corp.

Guidance, Outlook, and Management Commentary

Management Changes: Michael Nierenberg, currently the CEO, has entered into a new five-year employment agreement with the Company.

  • 2022 Compensation: Base salary of $1.25 million; target cash bonus of $1.875 million (0-200% range); and an initial equity grant valued at $5 million.
  • 2023+ Compensation: Base salary of $1.25 million; target cash bonus of $5 million; and annual long-term incentive awards with a target value of $8.75 million.
  • Severance: Qualifying terminations may trigger cash severance equal to two times the sum of base salary and target bonus, plus accelerated vesting of equity awards.
Risks and Uncertainties: The filing includes forward-looking statements regarding the transition. Key risks include the ability to successfully manage the transition to self-management, achieve expected cost savings, finance the internalization, and retain executive officers and employees. The Company disclaims any obligation to update these statements.

Investor Verification Checklist

  • Verify the exact timing and execution of the $400 million termination payment to FIG LLC.
  • Confirm the official effective date of the name change to Rithm Capital Corp. and the ticker symbol change to RITM.
  • Review the full text of the Internalization Agreement (Exhibit 10.1) for specific indemnification obligations and non-solicitation restrictions.
  • Monitor subsequent filings for the finalized employment terms of the CFO and Chief Accounting Officer, which were not fully detailed in this report.
  • Assess the impact of the $400 million cash outflow on the Company's liquidity and leverage ratios in upcoming quarterly reports.