To withdraw your question, press star 1 again. I will now hand the conference over to Emma Holke, Deputy General Counsel. Emma, please go ahead.

Thank you and good morning, everyone. I would like to thank you for joining us today for Rhythm Capital's third quarter 2026 earnings call. Joining me today are Michael Nierenberg, Chairman, CEO, and President of Rhythm Capital, Nic Santoro, Chief Financial Officer of Rhythm Capital, Varun Silverstein, President of New Res, and Peter Brindley, Head of Real Estate at EloCorp Properties. Throughout the call, we are going to reference the earnings supplement that was posted this morning to the Rhythm Capital website, www.rhythmcap.com. If you've not already done so, I'd encourage you to download the presentation now. I would like to point out that certain statements made today will be forward-looking statements. These statements, by their nature, are uncertain and may differ materially from actual results. I encourage you to review the disclaimers in our press release and earnings supplement regarding forward-looking statements and to review the risk factors contained in our annual and quarterly reports filed with the SEC. In addition, we will be discussing some non-GAAP financial measures during today's call. Reconciliations of these measures to the most directly comparable GAAP measures can be found in our earnings supplement. With that, I will turn the call over to Michael.

Thanks, Emma. Good morning, everyone. Thanks for joining our call this morning. This quarter, we demonstrated the power of the platform and the risk discipline we bring to our investors and partners despite a very challenging environment. If you take a step back and look at the quarter, all indices related to markets we invest in were wider, interest rates rose significantly, geopolitical concerns persist, oil rose, and we still had a great quarter. Our operating business lines, New Res, Genesis, perform really well. Scale matters in those businesses and with our MSR business at approximately 880 billion of MSRs at New Res and Genesis clicking on all cylinders, we sit in a very good position in the marketplace. AI initiatives and expense management will help us drive higher earnings in the future and I firmly believe AI will change the archaic nature of the mortgage industry. Our real estate business in Rhythm and our asset management business should be a very good growth area for us going forward. Our Alicor investment, which was formerly known as Paramount, where we took the company private and invested in New York City and San Francisco offices, is an area we're very excited about. We are seeing significant leasing activity, growing rents, and brought in a partner on 1301 6th Avenue. As with most assets, entry point matters. and buying off 75% discount to replacement value should reward our shareholders well. The scope to real estate business is world-class and with an amazing track record. They continue to see more inflows into all of their differentiated strategies as well as their recent fundraise, which was approximately $5.5 billion. Our asset management business is seeing real inflows. We are launching new funds and did a first close on our new ABF funds. We now have multiple funds in the marketplace including partnerships with the large banks on the distribution side. Investing in our clients, people, and products is essential to our success. I will say when we set out to launch our asset management business in 2022 upon our separation from Fortress, we were running around the globe making connections and developing relationships with investors everywhere. Today we stand at 60 plus billion, a third party AUM. We have well north of 200 different partners and LPs, and I feel like we've just begun. Our mantra of performance first and making sure we have the expertise in the products we offer our clients is the backbone of our business. We need to differentiate ourselves from others, and we will. I've never been more excited about the trajectory of our firm and the collaboration that is happening. Really exciting times for us and our partners. This quarter, We changed our presentation a bit, and we speak a little bit to the Rhythm journey and where we're going. Please have a look. I'll now refer to the presentation that's been posted online, and I will begin on page three. So when you look at Rhythm today, it's roughly $110 billion of investable assets. That includes both the balance sheet and third-party assets that we manage on behalf of others. When you look to the left side of the page, New Res is the third largest mortgage servicer in the United States. I pointed out earlier that we have approximately $880 billion in mortgage servicing rights, and we originate roughly $60 billion in mortgages. There's something there. We don't need to originate a mortgage to make money. If the economics are there, we'll do it. If not, the business performs extremely well and makes a lot of money. Genesis, the number two... residential transition lender in the country, doing a lot more today in both RTLs as well as in multifamily, and we serve well north of 700 sponsors. Elicor Properties, as I mentioned before, was the company we took private. That was formerly known as Paramount. And Peter Brindley, who's with me here today, who runs real estate there, will speak to that in a minute. When you look to the right side of the page, our AUM north of $60 billion, I pointed out, you know, when we first started this journey in 22 to raise money from third parties, we were running around everywhere. And now we have well north of $60 billion of a real AUM, multiple funds in the marketplace, a great brand, and most importantly, great teams that manage the money on behalf of our partners in the marketplace. When you look across this north of 30 years of performance across all of our different strategies, The other thing that I think will differentiate us as we go forward in the future is we do invest our own capital along folks that invest in our funds. When you look at the quarter on page four, very strong quarter, third quarter EAD of 55 cents per diluted share, 28 consecutive quarters where our EAD was greater than dividends paid, cumulative dividends paid just a little bit south of $7 billion at $6.8 billion dollars. Earnings available for distribution in the quarter, again, $315 million. Gap net income, $217 million, so 38 cents per diluted share. When you look at book value for the quarter, $7 billion. We're actually a little bit higher quarter over quarter. A lot of that's due to, honestly, our hedging activities as well as our MSR business, which in a higher rate environment is going to perform extremely well. are common stock dividend 11.2%, 25 cents per diluted share, and cash and liquidity, we ended the quarter at $1.9 billion. Page five, if you look at the rhythm story, and then certain slides I'll take you through, but I'll take you through real quick on this one. We started this company in 2013 to take advantage of opportunistic investing in, at that time, mortgage servicing rights because the banks needed to sell them due to Basel III capital rules, as it related to the amount of capital that they needed to hold on balance sheet. Over the years, we focused on broadening our internal capabilities through acquisitions while working with our private equity business at Fortress which owned at that time Mr. Cooper and we also had built one main financial at that time. In 2018, when it was clear that we were going to sell these portfolio companies because they sat in our private equity business, we decided to build our own. So we acquired a company called New Penn Financial and that was the beginning of New Res. Today, again, New Res is one of the top mortgage companies in the United States. 2022, we buy back the management contract from Fortress and we rebrand the company as Rhythm Capital. It was formerly known as New Residential. Over the years, we said, okay, let's go broaden our asset management business. 2023, we buy Sculptor. 2025 we buy Crestline and again we take Paramount Private in 2025 as well. So that's really the beginning as far as how we got to the place that we did on the asset management side. When you look at our origination businesses at both New Res and at Genesis, it truly differentiates our product offerings in the ABF space. We not only have the ability to underwrite a borrower, we have the ability to service that borrower and whether those underlying loans go into funds or whether they sit on balance sheets, it is a factor that will differentiate us from others in the marketplace because we don't have to just go out and bid in competition against everybody else to buy a certain asset class. And as I pointed out before, we have north of 200 institutional investors globally and well north of $61 billion in AUM. So where are we going? where we're going on a forward basis. Our origination businesses will continue to be the core of our earnings at the public company level. We're going to continue to try to scale our asset management business, which we're really excited about. As asset management earnings scale, we have the potential to optimize our corporate structure and actually have that as its own segment, but we need to continue to grow our so-called FRE or fee-related earnings in order to do that. When you look at page six, The quarter in review. Asset management, I pointed out, we're starting to see real momentum in some of the new funds we have in the marketplace. During the quarter, we raised $569 million of new capital, and we're starting to see real commitment as we look to the fourth quarter for fund inflows. Year-to-date gross inflows are a little bit south of $3 billion. Crestline held their final close on a European Capital Solutions Fund and bringing total commitments there to $625 million. And again, we continue to see healthy inflows into our business post the end of the quarter. When we look at our core areas, Elecor expanded its third-party capital base to a JV with a strategic partner for 1301 6th Avenue, while also signing 320,000 square feet of new leases in the quarter. Genesis originated $1.5 billion in RTL originations in the quarter, bringing year-to-date originations of $5 billion and exceeding all of what we did in 2025. and also New Res originated, when you look from a year-to-date perspective, $5.1 billion of non-agency loans, mostly in the non-QM space. It's a new record for New Res in the product class. I bring that up as I pointed out in my opening remarks. We don't need to originate a loan to be competitive with someone else for the sake of doing it. This is an area where we're using our origination business, we use our funds business, We use our balance sheet to originate products where we're going to make more money for both our shareholders and our clients. When you look at it from a leverage perspective, we continue to leverage technology and investments in AI to achieve additional efficiencies. We expect to drive, going forward, $125 million in savings for New Res. I pointed out in prior quarters, We own roughly 9.9% of a software company called Valen. Valen is going to be our new servicing technology. That should come online at the end of Q1 in 27. Our continued focus on expense discipline will help drive consistent, sustainable earnings growth. And we look in the quarter, NewReds delivered a 24% operating ROE, showcasing the strong performance in a challenging environment. When you look about our resilience across markets, New Res' $879 or $880 billion of servicing will continue to reward shareholders extremely well as we go forward with a very strong earning stream, strong credit at Genesis compared to the rest of the industry, and then we remain extremely vigilant on our interest rate management across the board. Page 7 really just talks again to the sum of the parts valuation. I'm not going to take you through this. The bottom line here is we think our equity is extremely cheap. We trade at a discount to book. When we look at our book value of give or take $12.50, the stock will likely open up higher this morning, but we still trade way too cheap on a relative basis, and we continue to evaluate ways to get our share price up. In the asset management segment, have a look at page 9, 200 institutional investors, 16 global offices. The products that we offer, and I pointed this out again in my opening remarks, we must have expertise in any fund or product that we offer to the market. The way that I think about our business, we are everything in credit, we are everything in real estate, we're everything in the multi-strat business. Our ABF franchise should be significantly bigger. And, you know, sometimes we think about or we always think about what's next. And it's likely going to be something in infrastructure as we go forward. It was extremely scalable and the TAM in that marketplace is massive. Page 19, the asset management business. I'm not going to hit the same bullets that I did. If you look to the bottom part of the page, the performance numbers, I think, stand, you know, they stand out relative to the PAC. You look at some of the crest line numbers. You look at Sculptor on the multi-strat side, which has been around forever. And again, very, very excited about where we're going in that business. Page 11, the asset management business as we continue to scale. Again, a lot of these numbers are repeat. A couple of things I do want to point out. Where I think we go organically... When you look at our organic growth initiatives, we expect to deliver AUM of about 75 to 80 billion by the end of 2028. We continue to look at opportunities to grow our asset management business in the M&A world. And again, like I say always, we need to lead with performance. On the commercial real estate side, I'll hit one bullet here. Just talking about opportunistic investing, we had bought two years ago an office building just outside Washington D.C., that we monetized in the third quarter. Again, these are examples how we think about buying assets at the right times. This asset was located in Boston, Virginia. I think we paid $26 or $27 million for it. We sold it with a $50-something million handle, 30% IRR, 1.6 MOIC. And when you look across the rhythm side on the balance sheet, Third quarter realizations from an IRR perspective, 43%, 1.6 MOIC across three different transactions. The other thing is when you look at capital markets in our financing business, we closed on 31 West 52nd Street on a 500 plus million dollar transaction, and we continue to focus on selective refinancing. So with that, I'll turn it over to Peter, who will take you through Alicor.

Thanks, Michael, and good morning. And turning to page 14, We had a great quarter at Alicor Properties and we continue to execute on our business plan. The third quarter was largely defined by strong leasing results, the refinancing of 31 West 52nd Street, the new joint venture agreement at 1301 Avenue of the Americas, the advancement of our significant amenity plans and continued operational excellence across the portfolio. Year to date, we have executed leases and have leases pending on approximately 1 million square feet across our New York and San Francisco core portfolio with a weighted average initial rent of approximately $100 per square foot, 22% higher at share than the weighted average initial rent for our 2025 transactions. Year to date, approximately 77% of our leasing activity in New York and San Francisco has occurred on vacant space and space scheduled to expire in 2026 and the balance has served to de-risk lease roll in 2027 and beyond. Our pipeline remains robust and our lease expiration profile was manageable with approximately 2% at share expiring per annum in 2027 and 2028, paving the way for occupancy gains in our portfolio going forward. Turning to page 15, our markets and our portfolio. In New York, Midtown's leasing fundamentals continue to strengthen, particularly in well-located, well-amanitized Class A buildings. Looking at the broader midtown market, the third quarter marked the 12th consecutive quarter leasing activity outpaced the five-year quarterly average. Net absorption in midtown remained positive for the ninth consecutive quarter, the longest run on record, resulting in the ongoing reduction of availability, particularly in midtown's core submarkets. We continue to gain momentum and expect robust demand, coupled with the ongoing absorption of quality space in midtown to support significantly improved deal economics moving forward. We believe we are well positioned to capitalize on current tenant demand in Midtown as we execute on our growth-focused business plan. At quarter end, our New York core portfolio's leased occupancy was 88.6% at share. Year-to-date, initial rents in our New York portfolio of approximately $110 per square foot on leases signed and leases pending are approximately 36% higher as compared to our 2025 transactions. Our third quarter was highlighted by the 113,000 square foot renewal and expansion of a financial institution at 1301 Avenue of the Americas, a building that is currently 100% leased. Turning to San Francisco, market-wide leasing activity in the third quarter was 2.7 million square feet, bringing the year-to-date total to approximately 9.7 million square feet, on pace to be the strongest year-end total since 2018. San Francisco-based companies have raised a historic $270 billion of venture capital this year, mainly benefiting AI companies, which have contributed 36.5% of the leasing velocity year-to-date. This is further reinforcing San Francisco as the world's leading hub for AI innovation and has powered San Francisco to its fifth consecutive quarter of positive absorption. At quarter end, our San Francisco core portfolio leased occupancy was 65% at share, up 590 basis points since Q1 2026. Approximately 65% of the 1 million square feet of leasing year-to-date has occurred in San Francisco, 96% of which has occurred with companies that are new to our portfolio. Our third quarter was largely defined by a 76,000 square foot lease with a Fortune 100 entertainment company and a 119,000 square foot lease with an AI-powered healthcare company, two of San Francisco's top 10 deals during the third quarter. As previously mentioned, planning is underway to deliver exceptional amenities at both One Market Plaza and One Front Street, which has already begun to generate buzz in the market and will support our growth-focused strategy in San Francisco going forward. We remain focused on further developing our tenant relationships, delivering market-leading hospitality, securing renewals for upcoming lease expirations, and filling our vacant spaces. Finally, we believe our capital improvement strategy will drive significant rent growth and occupancy gains in 2026 and beyond. We are moving quickly to execute our key objectives and look forward to updating you on our progress.

Thanks, Peter. I'm going to take the Genesis section, which begins on page 17, and then Varun will wrap up and talk about new rent. As I mentioned on the Genesis business, Truly Scaled, great reputation with high quality sponsors. When you look at this business and you look at delinquency trends across some of the other, what I would call peer originators in the business, we truly stand out. I mean, our delinquency percentages are about 3%. As I mentioned, again, in earlier comments, we don't need to originate something for the sake of doing it. We need to do it with high quality sponsors. The $1.5 billion in the quarter, which takes us now to $5 billion. It's not a so-called race to get to $5 or $10 or whatever the number is. It's just creating high-quality loans that are going to generate mid-teens returns for both our third-party partners as well as our balance sheet. When you look to the left side of the page, pre-tax income for the quarter, $33 million, 14% growth. year over year. And then the annualized ROE on that business right now is about 13%. And I do think, again, with AI and technology, those numbers will likely go up over time. When you look at page 18, it's just a snapshot of the portfolio. You can have a look at that at your own leisure. And then finally, if you look at page 19, we continue to outpace the broader market. We continue to establish more relationships. We are investing in our people. We are investing in our sales force. and when you look at the overall growth, that'll continue over time. With that, I'll turn it over to Varun, who will take you through the New Res section.

Thank you, Michael, and good morning to everybody. Starting on slide 21, and just kind of continuing with Michael's comments as well, New Res had another great quarter with third quarter pre-tax income, excluding mark-to-market, of approximately $330 million, which is up 7% quarter-over-quarter. and delivering a 24% annualized operating ROE for the quarter. The results driven by origination strategy, growth in subservicing, higher servicing fees and lower amortization. And the performance continues to show the power of the platform, delivering on our results first ethos by achieving 15 consecutive quarters of high teens to low 20s annualized operating ROEs. Moving to slide 22, our edge is simple. We stay disciplined and nimble to optimize returns while maintaining operational excellence and client trust. We execute through a dynamic channel strategy coupled with robust product ecosystem with a focus on our homeowners and clients. And we invest in game-changing technologies to redefine workflows, raising the bar on customer experience, driving our efficiency throughout our platform. Turning to slide 23, We estimate annualized savings from our technology and AI investments of approximately $125 million, which will further drive our cost leadership. Our co-development with HomeVision is ahead of schedule with straight-through processing of eligible loans expected to launch in the fourth quarter. Our partnership with Valen is on track with phased migration of loans to Valen OS in the first quarter of 2027. And once these platform investments are completed, They're a key driver in us growing market share without sacrificing any shareholder returns. Turning to slide 24 in our originations business. Funded volume came in at $12.9 billion, down 19% quarter over quarter, mainly due to interest rate environment lowering overall origination volumes. However, we remain focused on non-agency growth and increased overall non-agency volumes up 8% quarter over quarter, and 30% year over year despite the market conditions. And while market competition continues to pressure gain on sale margins, we maintain pricing discipline, we do not chase market share and we stay focused on maximizing returns. We also remain opportunistic on co-issue MSR acquisitions with 5 billion in notional volume as we continue to diversify our investment strategy. New products this quarter include our easy-click home equity solution, expansion, advantage score utilization, and we're excited about our new joint venture with eXp Realty, the second largest real estate platform in the U.S., and are working through our due diligence and more to come in the next few weeks. Moving to slide 25 and our market-leading servicing platform, Our focus remains in growing our capital life fee-based third-party business with 15 new clients and approximately $80 billion in new loan boardings this year. Subservicing remains a foundational capability of our platform and our operational performance is evidenced by our client retention rate. Our owned MSR portfolio continues to perform well across products and while agency and GINI delinquencies increase slightly quarter over quarter, we attribute this to seasonal factors. and while delinquencies remain low from a historical context, our special servicing business has significant opportunities to deliver superior outcomes for both homeowners and clients across market cycles. Our business has never been better positioned and I look forward to continue to share the next chapter of the New Res Growth story. Back to you, Michael. Thanks, Barron.

Finally, just on the investment portfolio, continue to look for opportunities in this marketplace where where we see certain dislocations. I would say while spreads are a little bit wider, as I again, as I pointed out earlier, the balance sheet has really been there to support our origination businesses as well as our asset management business. And I think you'll see a lot more of that as we go forward. So again, exciting times for us. We look forward to answering any questions that you may have. We'll now turn it back to the operator and and that's it so far.

We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Doug Harder with BTIG. Your line is open, Doug. Please go ahead.

Thanks, and good morning. Michael, if you could talk a little bit more about the plans to grow the AUM and asset management. Which products do you see the most momentum in right now to deliver that growth?

Sure. So, you know, I point to one is continue to establish more relationships with what I would call the big wire house banks who are distributing products through the wealth divisions. When you look where we are across, whether it be the sculptor platform, you know, we launched something called Our Home, which is a rhythm fund through one of the large banks. We'll continue to do more of that. So that should, you know, that will help with growth. The product areas around what I would say the wealth side are things such as capital solutions, which take advantage of dislocations in markets. We're looking at 40 act funds on the sculpture side through some of the large banks. That's more of a liquidity vehicle around a hedge fund type product. The real estate business, as I mentioned earlier, will continue to grow. So when you look at the kind of the wire houses, that's an area of focus for us as well. What I would really say, and then, you know, I pointed out we had our first close on our ABF fund this past quarter from a large pension fund here in the US. The amount of demand that we're seeing today for products that we either manufacture or that we have expertise in is probably the highest I've seen in, quite frankly, my career. I'm old and I've been doing this for a long time. So when you look, for example, on the resi side, we have a ton of interest in whether it be SMAs on, you know, Varun pointed out, you know, doing all this non-agency product. We make the products that our clients want. So right now we're seeing extreme demand, what I would say in ABF and ABF-type products, again, whether it be through our funds business or through specific SMAs. You take the Genesis business. You know, when you look at some of this stuff on a levered basis, you're talking about mid-teens returns. We put our money where our mouth is. We take equity positions. So you're going to see a lot more growth in those businesses. When we look at the broader platform, one thing that I think is extremely different today than where we've been in the past is we have real collaboration across the house. We're working on branding. When you look at, you know, we have three brands. So we have, you know, Rhythm, Sculpt, or Crestline. We sit down with a client and We're not changing any of the investment teams. We're not changing any of the investment processes, but it takes us 10 minutes to talk through the three different brands. We need to get to a place where we have a common brand. It's a much easier story. Quite frankly, LPs want to allocate to fewer managers that have more products that are available. We're going to lead with our expertise. We're going to lead with our performance first. Credit's going to grow. Our multi-strat business is going to grow. Our real estate business is going to grow. And our ABF business is going to grow. And then we'll continue to look at opportunities to acquire other managers. The other area I pointed out that we need to be in at some point is infrastructure. It's not hiring one or two people to build around that. We need to actually have a real infrastructure business. So I think you're going to see some significant growth as we go forward, and we're really excited about it.

Great. I appreciate that, Michael. Thank you.

Your next question comes from the line of Bose George with KBW. Your line is open. Please go ahead.

Hey, everyone. Good morning. Actually, I wanted to ask on the mortgage banking side, it looks like your gain on sale margin, you know, is up in the consumer direct and the wholesale. Is that just a mix of product or, you know, was there sort of actual improvement? And then just on gain on sale trends that you're seeing for locks in September, October after rates have gone up. Thanks.

So, good morning. Yeah, I would tell you on the direct-to-consumer channel, it definitely is a little bit of a product mix, right? You're seeing less refinances, and you'll start to see more of our home equity products and more of our non-QM products, so you're basically driving a little bit of a higher return overall. On the wholesale side, obviously, it's a very competitive market, and we're continuing to basically test that product and not chase But I do think that, you know, coming into the fourth quarter, you're going to continue to see that there's definitely going to be more pressure on the wholesale side on margins overall. And Bo, it's not surprisingly, you know, the interest rate environment is going to drive overall origination volumes. And, you know, we've seen a pretty material, I would say, decline in production coming from September to October, and you're likely going to see something close to about 25%.

Part of that is the market. The other part is when we think about having one investment dollar, what is going to be the best return for our shareholders? That's the other way we think about the origination business. Again, this echoes the earlier comments in that we don't need to originate a loan for the sake of originating a loan. With prepayment speeds at very low levels, our MSR book will continue to manufacture and produce a lot of great results for the company. I think that's the other thing to point out here.

Okay, great. And then just on the book value quarter to date, is that relatively stable?

Yeah. I mean, you should assume it's roughly unchanged.

Okay, great. Thanks.

Thanks, both.

Your next question comes from the line of Crispin Love with Piper Sandler. Your line is open. Please go ahead.

Thank you, good morning. Just in the asset manager on further growth, you've called out infrastructure a couple of times. Can you think about a potential inorganic opportunity there? Do you think it would follow a similar playbook to Sculpt or Crestline? Is it a capability that you need to buy fully with scale, or can you do it on a smaller scale and then build within the current platform? And then just relatedly, is there any interest in adding digital infrastructure or data center investing to the platform?

I think it's more likely to be similar to the Sculptor Crestline or something that's even potentially larger. We need to be in the space. We do invest in that space when you look at the credit business and you look at the teams at Sculptor. Sculptor has give or take 350 professionals there, give or take 100 investment professionals. You think that We're everything in credit. We're everything in ABF. So there is investing that goes on there. Same thing at the S&C Crestline side. We're not putting these kind of investments today on our balance sheet at the rhythm level. So it's got to be something of scale. We don't want to start with something that is a couple folks and then it's going to take us five years to scale it up and miss that opportunity. So it's something that We have our eyes and ears out and hopefully there's something that's attracted to us and a potential partner that will help us scale.

Great. Thanks, Michael. And then just a second question on mortgage. You called out $125 million in potential cost savings. Just kind of first kind of timing of those and then also just the ROE impact. ROEs and new rates have been strong in a tough environment, I think 24% or so this quarter. So when you look out over the intermediate term, kind of what's possible for the operating ROEs in that segment? Could you see expansion from levels today, just given the AI savings and eventual normalizing of the mortgage environment?

Yeah, so I mean, I'll just start with top line stuff. So if you think about our mortgage company, which does give or take about four and a half billion of revenue, and you look at what we bring to the bottom line, I think there's a lot of room for higher earnings there. And AI has got to help that. And I mentioned in my opening remarks, you talk about Anybody that's ever taken out a mortgage, which most folks have, the archaic nature of that with providing paperwork and you think about underwriting guidelines, what have you, that'll change. And I think AI is going to help significantly. Couple that with the investment and this company, Valen, that we're working with, which is really a tech company. I referred to it earlier as a software company, but we're going to be using their software platform for our servicing business. That is going to make us highly efficient. As far as the timing of, and I'll talk to this for one sec, and the timing of really seeing the earnings I think is going to be most likely, you'll start to see them kick in in 27, but they'll go on for 27, 28. When you look at product, you know, the one thing, and I look across the board at obviously a lot of other peer companies that are in, whether they be in the buy now, pay later category, I look at the valuations on some of those companies versus us where we trade at five times earnings and we actually make more money than most of these other companies out there. I look at some of the digital banks that are valued higher. We've got to figure out a way, one, to roll out more products, but two, to change our valuation. I think a couple things here, and it'll catch on. Everybody wants to be in a growth equity type stock. I look at us relative to our peers in across the board. And there's just no reason for us to be trading where we do. That's one. But I do think you're going to see these savings come in in 27, 28. And then, you know, and I'd like to see us launch more products, but they got to be credit worthy products because I do think at some point the credit markets will turn and you start to see delinquencies trend higher. Right now we're not seeing that, but I do think you'll see that at some point. That's where our special servicer, which is second to none, should kick in and generate even more earnings for the house.

Your next question comes from the line of Kenneth Lee with RBC Capital Markets. Your line is open. Please go ahead.

Hey, good morning. Thanks for taking my question. Just on the Genesis Capital side, wondering if you could just give us sort of like updated outlook or thoughts around potential originations volume, just given the current rate outlook there. Thanks.

Good morning. So our goal there, when you look at the business, if we're going to do, I think the production numbers we'll probably do are something between six and six and a half billion in production. Credit really matters, as we all know, and all this stuff, while saying that I think the opportunity for us to grow our multifamily business on the lending side is significant. So the way to think about that business, as we roll out whether it be SMAs or funds around the Genesis product, a good chunk of production could go into those funds. What we want to do is really grow the amount of origination we have so you continue to grow earnings at the public company level. So it's a combination where I think that the multifamily business from the origination side will grow significantly over time and it has grown significantly over time. The RTL business We all know things get challenged when interest rates, you know, you have mortgage rates of seven and a quarter, seven and a half or something in and around there. Things can be challenged. But when you look at this paper, we make loans to high quality sponsors. That's really the bottom line. High quality sponsors, the velocity or the turnover of this product, the duration here is give or take a couple years. So the real growth, I think, is going to be more on the multifamily side as we go forward.

Great, very helpful there. And just one follow-up, if I may, on the ELICOR property side, just looking at the San Francisco leased occupancy rates, just curious, looking for what factors do you see that could potentially help drive higher occupancy rates going forward? Thanks.

Yeah, Kenneth, thank you for the question. I would say two things, really. One is we have very manageable lease roll over the next couple of years, so we have firm ground by which to really, I think, achieve significant occupancy gains going forward. We also know that in San Francisco, tenants are pursuing the best product, and we have a very, very fine portfolio in San Francisco. Tenant demand is currently in the neighborhood of 10 million square feet of tenants out looking for space. and we are incredibly active. We're as active in San Francisco currently as we have been in a very long time with leading companies across a variety of industry including tech, AI, legal, financial services. So we're really firing on all cylinders and the market has certainly been very receptive to the capital improvements that we're making specifically at one market and one front which we've now mentioned a few times. So the team is hyper-focused on getting that occupancy up Thank you very much. Thanks, Ken. Have a good weekend. Your next question comes from the line of Trevor Cranston with Citizens JMP. Your line is open. Please go ahead.

Thanks. Another question on New Res. I'm looking at slide 36, particularly the prepay speeds and amortization on the MSR. I was curious if you could just give an outlook for, you know, how much room you think there is for MSR or prepay speeds to come down in 4Q and going forward if mortgage rates kind of stick above 7%. and more broadly, if that benefit plus the expense savings you guys have talked about is kind of enough to offset the pressure on the origination side. Thanks.

So, yeah, I mean, I think you're kind of getting to the floor on speeds. You know, you just have a certain amount of turnover, you know, for just life events that are going to continue to drive, plus also When you think about some of the seasoning on our portfolio, you're just going to really be at that, you know, floor. So I don't really think that speeds are going to come in, you know, very much slower than what you saw in, say, September speeds overall. You know, in the offset, I will tell you, in between amortization, you know, and originations is pretty linear, right, from the balanced business model on how we look at it. But also you have to think about it as, you know, Michael's comments and my comments, right? We're not driving, you know, just growth for growth's sake, right? We want to make sure that we're focused on margins and, you know, if the market really gets very, very competitive, you know, I think that, you know, we're going to look at it in that manner as opposed to just chasing volumes. But I will tell you overall, you know, we do think that we have a balanced business model. We want to stay in front of our customer base and our formulating customers and making sure that we are delivering products for them as our core focus and if there's opportunity outside of that, we'll basically look to basically enter into those markets and that our multi-channel strategy helps us kind of take advantage of those opportunities when they become available.

Trevor, the other thing I would say is if you look at the business and to your question about how the servicing book will offset the origination volumes We look at the entire company. When you look at the servicing book today, I think there's roughly 15 billion of escrow deposits. Fed raises rates 25 basis points. It's a huge lift to kind of the firm from a net interest income standpoint. So the balanced nature, I think, of everything that we do across our entire business, and that could include anything from the mortgage company to Genesis to Elicor to our asset management business is something that I think it's going to reward shareholders as we go forward. So that's why, you know, when you look at our business model this quarter versus some of the other folks in the marketplace, you know, that's one of the other reasons why I think we had a good quarter.

Yeah, that makes sense.

Okay. Appreciate it. Thank you.

Your next question comes from the line of Marissa Lobo with UBS. Your line is open. Please go ahead.

Thanks and good morning.

I wanted to ask about the investment portfolio and how you're thinking about the opportunity here. Are the new deployment levels attractive enough to grow the portfolio or is the focus more on securitizing and recycling capital?

I think it's both. It's also the investment portfolio. We will continue to recycle that. I'm going to give you the example where if we don't originate a mortgage loan but we could take a dollar of capital and reinvest that back in our asset management business along with a third-party LP who's paying us a management fee, those earnings are recurring and they traded a much higher multiple than the so-called mortgage loan that's going to sit on the balance sheet. So I think it's a combination where we'll use our balance sheet to continue to support our origination businesses. We're going to be opportunistic and look for areas where we can deploy significant amounts of capital. You know, and Varun pointed out, you know, the non-agency business at New Res year to date, I think it's six plus billion dollars. When you look at that, a good chunk of that is non-QM that actually sits on balance sheet and then we do securitization. So there'll continue to be significant earnings as we support our origination businesses. look for opportunities where we have market dislocations, as I pointed out. This office building, for example, that we sold in Ballston, Virginia, some of the Elecor stuff where we're entering that business at a 75% discounted replacement value, and we'll continue to look at other things, and there's always something that comes up. The beauty, I think, where we sit as an organization is that between myself and some of my partners, Charles Sorrentino and others, we've been doing this for a long, long time, and we have very, very good relationships with are bank partners, but also we know a lot of folks in the marketplace, and we should continue to see opportunities across the board. So it's a little bit of everything, and the investment portfolio will grow over time, but it's going to be opportunistic.

That's helpful. Thank you. And there's been a lot of movement on housing policy recently, particularly around LLPAs, advantage scores, and now mortgage insurance. Can you talk about how you're thinking about the potential impact on New Res?

Look, obviously we have good relationships with our partners in DC. I do think that the policies that the director of the FHFA are putting out there, we We support them. We were on the pilot program with Freddie Mac on the Vantage score. So certainly from our perspective, we do think that that will continue to drive benefits for our homeowners. And if there are changes on any of the insurance premiums, obviously we'll incorporate that and deliver those savings directly to homeowners. And so we certainly support the initiatives that the director continues to drive.

Okay. Appreciate the answers.

Thank you.

Your next question comes from the line of Jason Stewart with Compass Point. Your line is open. Please go ahead.

Hey Jason. Good morning. Thanks. Hey Mike. Just to follow up on Marissa's question, in terms of the New Res platform, how important is the technology aspect of the platform? I mean, this is a very dynamic mortgage market, and implementing these changes seems like it's a little probably tougher today than it has been in the past. Could you just talk about, you know, where your position in terms of technology versus some of the other peers?

I'll give you it from a high level, and then I'll turn it to Varun. Our technology budget, when we look at expense overall, is pretty significant. The amount of personnel we have around the house related to the technology so-called business is very significant. I'm a believer that on technology, you're better outsourcing to so-called experts in the industry who are going to be there to either build you models or build you software that's going to make your business run better. But while saying that, you know, we have a ton of people there and we have a ton of investment. The partnership with Valen should be extremely significant across our entire business as we go forward. And it's not only Valen, but there's others as well. So, Parame, you want to share?

Yeah, I mean, Michael's right. I would tell you that, you know, We look at our technology dollars to try to focus on prioritizing the initiatives that have the biggest impact. And Michael talks about Valen, right? And if you think about Valen overall, and there is nothing like it in the market, and we're really excited to basically incorporate that technology into our business, the investments that Rhythm made in Valen, Back in 2019, we've had that front row seat. We've talked about this before, really kind of seeing how it just drives overall operational efficiency, improvement in workflows. Our entire servicing organization has been working with Varun for the last year plus. Everybody's definitely Excited about what's ahead. Obviously, there's a lot of work for us to basically go from, I'll just say today, throughout the end of 2027 and basically in doing that overall conversion. But if you just even look at all of the AI initiatives and you just continue to see how and what AI does, it's pretty remarkable about how we think about different initiatives and how that can impact our business. And our focus really is just making sure that we're prioritizing our technology dollars and our technology focus on the items that really move the needle that drive our efficiency and drive our ROE. And that, you know, it sounds easy. I know we focus on it a lot, the management team here, and we work through it, you know, obviously with Michael. on what we try to prioritize every day. So that's what I would tell you and how we focus. This is, and you asked the question in the beginning, you know, how does this basically, you know, and how will this impact how we perform in the industry and how we compete? We think this is, you know, one of the top components of how we can continue to drive, you know, performance from an ROE perspective and differentiate new res throughout the market. No question.

Thanks, Varun. And Michael, a follow-up to Marissa's question on the investment portfolio. You know, there seems to be, you know, I call it episodic opportunities to buy things like non-QM and secondary. If you could just elaborate a little bit on how you're thinking about liquidity relative to opportunities, if there's sort of a metric that we can look at as a minimum liquidity measure or how you're thinking about funding markets in relation to the opportunity. Thanks.

The one thing that's really different, I think, today about our business versus where we were, again, going back to when we left Fortress, 200-plus different LPs, great teams at Sculptor and Crestline, so working together across the platform, i.e., my comment about collaborating. We're not here to just grow the balance sheet, quite frankly. We need to use it strategically. I think any large-scale situations, we just saw a large consumer portfolio trade will likely bring in third-party capital alongside the bigger family of companies or investment strategies. So the goal is to continue to manufacture cash, i.e. have more cash, but it's not just to grow leverage here, particularly in this market. Is there something specific? I think, ideally, when you look at our balance sheet today, it's really MSRs, things that we do to hedge out the broader and many more. Thank you.

and some of the biggest money managers out there.

Thank you. Thank you.

Your last question comes from the line of Henry Coffey with Wedbush. Your line is open. Please go ahead.

Good morning and thank you for taking my questions. Great quarter. Two related subjects. First, kind of talking about investment. The mortgage REIT sector, particularly the commercial REIT sector, has just gotten absolutely clobbered. I know you're frustrated with your own valuation, but it's really ugly out there. Is that an opportunity? There are companies that are big originators in certain sectors that you aren't. I won't put out the names, but is that an opportunity or is that more just of a warning to kind of step away and don't touch?

I think on the commercial REIT side, I don't know that there's a lot of sellers, quite frankly. There are some companies out there that, I mean, it could be where some of the credit's actually challenged. We have RPT that we manage. Quite frankly, it's a very, very clean portfolio. We cleaned it up. We took over the management contract a couple years ago. We can't get that off the ground because nobody cares. It's tiny, and at some point, we're evaluating our options, what to do with that. Yeah, we're always looking for opportunities. I mean, we are going to grow our real estate presence. Whether it be Elicor, we continue to look at more office opportunities, but we don't need to be just an office. I brought up the Sculptor folks. They have an unbelievable track record of and, you know, they do things that are very, very different from the rest of the pack. So across the board, you're going to see us grow pretty significantly, I think, on the real estate space. If there's an opportunity to acquire another commercial REIT, we'll do it as long as, you know, from a credit standpoint, it underwrites. We don't want to take over someone else's issues right now. I think that's part of the issue with a lot of these REITs that are stuck out there.

And in the correspondent business, what are the real economics of originating in a 7% plus market in terms of do you own the customer? How do you think about that? I'm sorry. Can you repeat the question? In the correspondent residential mortgage.

Yeah, I think if you want to buy cheap MSRs, if MSRs are cheap, you do it. and if not, and this is, you know, Varun and I are on the same page on this, we don't need to originate a loan just to have more correspondent value unless we love the valuation of the underlying MSR and there is real gain on sale. If there's real gain on sale and there's margin, we'll do it and you love your MSR valuation. If not, you know, I'd rather take the dollar and support our asset management business or put it into Genesis or something else where we think we're going to earn a mid-teens return.

Great, thank you.

Thank you, Henry.

There are no further questions at this time. I will now turn the call back to Michael Nierenberg for closing remarks.

Folks, thanks for all the questions. We look forward to updating you during the quarter, next quarter, and thanks for the support always. Have a beautiful weekend.

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