XML 23 R11.htm IDEA: XBRL DOCUMENT
v3.24.2.u1

BUSINESS ACQUISITIONS | 6 Months Ended
--- | ---
Jun. 30, 2024
Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract] |
BUSINESS ACQUISITIONS | BUSINESS ACQUISITIONS Acquisition of Computershare Mortgage Services Inc. Rithm Capital completed the Computershare Acquisition and simultaneous merger of SLS and Newrez in May 2024 as part of its strategy to expand its subservicing capabilities. Rithm Capital accounted for this transaction using the acquisition method which requires, among other things, that the assets acquired and liabilities assumed be recognized at fair value as of the acquisition date. Purchase Price Allocation The following table summarizes the allocation of the total consideration paid to acquire the assets and assume the liabilities related to Computershare Acquisition during the quarter:
($ in millions) | Computershare |  |  |  |  |  |  |  |  |  |
Total Consideration | $ | 708.0 |  |  |  |  |  |  |  |  |  |  |
Assets |  |  |  |  |  |  |  |  |  |  |
Residential mortgage loans, held-for-sale | 2.4 |  |  |  |  |  |  |  |  |  |
Servicer advances receivable | 275.8 |  |  |  |  |  |  |  |  |  |
Mortgage servicing rights, at fair value | 696.5 |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents | 102.0 |  |  |  |  |  |  |  |  |  |
Restricted cash | 2.2 |  |  |  |  |  |  |  |  |  |
Other assets | 84.0 |  |  |  |  |  |  |  |  |  |
Total Assets Acquired | $ | 1,162.9 |  |  |  |  |  |  |  |  |  |  |
Liabilities |  |  |  |  |  |  |  |  |  |  |
Accrued expenses and other liabilities | 236.1 |  |  |  |  |  |  |  |  |  |  |
Secured notes and bonds payable | 190.6 |  |  |  |  |  |  |  |  |  |  |
Total Liabilities Assumed | $ | 426.7 |  |  |  |  |  |  |  |  |  |  |
Noncontrolling interest | $ | — |  |  |  |  |  |  |  |  |  |  |
Net Assets | $ | 736.2 |  |  |  |  |  |  |  |  |  |  |
Bargain Purchase Gain | $ | 28.2 |  |  |  |  |  |  |  |  |  |  |
On May 1, 2024, Rithm Capital acquired 100% of the outstanding equity interests of Computershare and certain affiliated companies, including SLS, for a GAAP purchase price of $708.0 million. At the time of acquisition, SLS and Newrez merged. Upon completing the Computershare Acquisition, the consideration transferred for the acquired assets and assumed liabilities was determined to be less than the net assets acquired from Computershare, resulting in an economic gain (“Bargain Purchase”). Rithm Capital completed the required reassessment to validate that all assets acquired and liabilities assumed on the acquisition date had been identified and appropriately measured in accordance with ASC 805. Based on the reassessment, the transaction resulted in a Bargain Purchase gain of $28.2 million, which has been included in Other income (loss), net within the Consolidated Statements of Operations for the six months ended June 30, 2024. The bargain purchase gain was primarily driven by the change in fair value of acquired MSR between the signing and closing dates of the acquisition as well as projected integration costs to be incurred after acquisition and not included in the acquired liabilities. The estimate of fair value of assets and liabilities required the use of significant assumptions and estimates. Critical estimates included, but were not limited to, future expected cash flows, including projected revenues and expenses, and the applicable discount rates. These estimates were based on assumptions that management believes to be reasonable; however, actual results may differ materially from these estimates. The assessment of fair value is preliminary and is based on information that was available to management at the time the consolidated financial statements were prepared. Those estimates and assumptions are subject to change as management obtains additional information related to those estimates during the applicable measurement period. The most significant open items necessary to complete are related to Servicer advance receivables, mortgage servicing rights, other assets and other liabilities. The final acquisition accounting adjustments, including those resulting from conforming Computershare’s accounting policies to those of Rithm Capital’s, could differ materially. The results of Computershare’s operations have been included in the Company’s Consolidated Statements of Operations from May 1, 2024 through June 30, 2024 and represent $33.6 million of revenue and $19.3 million of net income. Acquisition-related costs are expensed in the period incurred. Rithm Capital recognized $14.9 million of Computershare Acquisition related costs that were expensed for the six months ended June 30, 2024. These costs are grouped and presented within Compensation and benefits and General and administrative expenses in the Consolidated Statements of Operations. The following table presents the details of identifiable intangible assets acquired:
($ in millions) | Estimated Useful Life |  | Amount
Customer Relationships | 4.5 |  | $ | 16.0 |
Total identifiable intangible assets |  |  | $ | 16.0 |
Rithm Capital amortizes finite lived intangible assets on a straight-line basis over their respective useful lives. Unaudited Supplemental Pro Forma Financial Information The following table presents unaudited pro forma combined revenues and income before income taxes for the three and six months ended June 30, 2024 and 2023 prepared as if the Computershare Acquisition had been consummated on January 1, 2023:
| Three Months Ended June 30, |  | Six Months Ended June 30,
Pro Forma (in millions) | 2024 |  | 2023 |  | 2024 |  | 2023
Revenues | $ | 1,246.2 |  |  | $ | 1,216.7 |  |  | $ | 2,623.9 |  |  | $ | 2,089.2 |
Income (loss) before income taxes | 294.7 |  | 458.7 |  | 695.7 |  | 501.5
The unaudited supplemental pro forma financial information reflects, among other things, financing adjustments, amortization of intangibles and transactions costs. The unaudited supplemental pro forma financial information has not been adjusted to reflect all conforming of accounting policies. The unaudited supplemental pro forma financial information does not include any anticipated synergies or other anticipated benefits of the Computershare Acquisition and, accordingly, the unaudited supplemental pro forma financial information is not necessarily indicative of either future results of operations or results that might have been achieved had the Computershare Acquisition occurred on January 1, 2023, the beginning of the earliest period presented.

X
- References No definition available. + Details
Name: | us-gaap_BusinessCombinationAndAssetAcquisitionAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 805 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479907/805-20-50-5 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 805 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/805/tableOfContent + Details
Name: | us-gaap_BusinessCombinationDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration