{"id":3612,"date":"2022-11-02T17:14:13","date_gmt":"2022-11-02T17:14:13","guid":{"rendered":"https:\/\/frankbuysphilly.com\/rithm-delivers-124-5m-q3-profit-announces-acquisition\/"},"modified":"2022-11-02T17:14:13","modified_gmt":"2022-11-02T17:14:13","slug":"rithm-delivers-124-5m-q3-profit-announces-acquisition","status":"publish","type":"post","link":"https:\/\/frankbuysphilly.com\/rithm-delivers-124-5m-q3-profit-announces-acquisition\/","title":{"rendered":"Rithm delivers $124.5M Q3 profit, announces acquisition"},"content":{"rendered":"
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Rithm Capital<\/strong>, formerly known as\u00a0New Residential Investment<\/strong>, delivered a\u00a0$124.5 million<\/a>\u00a0profit from July to September, due primarily to its servicing portfolio performance. <\/p>\n In the third quarter, the company intensified the diversification of its businesses and further downsized its mortgage business amid a challenging macroeconomic landscape.\u00a0<\/p>\n \u200b\u201dOur messaging and approach in prior quarters have been not to fight the Federal Reserve<\/strong>, and we remain biased to a higher rate environment with wider credit spreads. We will continue with this view until we feel like the Fed signals they will stop raising rates and or we see the economic data softening,\u201d Rithm\u2019s CEO Michael Nierenberg said in a call with analysts.<\/p>\n Until that happens, Rithm\u2019s goal will be to \u201cprotect our balance sheet, maintain book value, maintain higher levels of liquidity and reduce expenses in our operating business lines while we drive consistent earnings and dividends for our shareholders,\u201d Nierenberg said.\u00a0<\/p>\n Company\u2019s executives announced on Wednesday an agreement to acquire a 50% interest in Senlac Ridge Partners<\/strong>, an investment management firm focused on commercial real estate, led by founder David Welsh. <\/p>\n Welsh and his team of approximately 20 employees will bring their \u201cvertically-integrated infrastructure and operations, development, sourcing and fund management capabilities to further Rithm\u2019s ability to raise third-party capital around different strategies,\u201d Nierenberg said.<\/p>\n That acquisition is another way to diversify Rithm’s businesses at a time when the company’s residential mortgage operations, mainly\u00a0New Rez<\/strong>\u00a0and\u00a0Caliber<\/strong>, are being affected by surging mortgage rates.\u00a0<\/p>\n Rithm reported a $209.8 million profit in the third quarter for its mortgage businesses, driven primarily by a gain of $267 million in servicing.\u00a0<\/p>\n The company delivered a $57 million loss on the origination side. The funded volume declined to $13.8 billion in the third quarter, down by 28% quarter over quarter and 60% year over year.\u00a0<\/p>\n Consequently, the company adopted a plan to reduce expenses, which resulted in the payment of $16 million in severance, $14 million in lease termination fees and $12 million in write-offs related to software and contract termination fees in the third quarter.\u00a0<\/p>\n The real estate investment trust has shed hundreds of jobs at its mortgage companies throughout 2022, with the most recent round of layoffs occurring in\u00a0September<\/a>.\u00a0<\/p>\n \u201cTo give you another sense from a headcount perspective, at the time of the closing of Caliber in 2021, there were 13,500 employees in the system. Today, unfortunately, due to the current market environment, that number is down to about 6,000 people,\u201d Nierenberg said.<\/p>\n