XML 37 R26.htm IDEA: XBRL DOCUMENT v3.24.3
DEBT OBLIGATIONS
 9 Months Ended
Sep. 30, 2024
Debt Disclosure [Abstract]  
DEBT OBLIGATIONS DEBT OBLIGATIONS 
The following table summarizes secured financing agreements, secured notes and bonds payable and also includes notes payable of consolidated CFEs:
September 30, 2024
December 31, 2023
Collateral
Debt Obligations/Collateral(C)
Outstanding Face Amount
Carrying Value(A)
Final Stated Maturity(B)
Weighted Average Funding CostWeighted Average Life (Years)Outstanding FaceAmortized Cost BasisCarrying ValueWeighted Average Life (Years)
Carrying Value(A)
Secured Financing Agreements:
Warehouse credit facilities - residential mortgage loans(D)
$3,152,286 $3,152,286 Oct-24 to Mar-286.3 %0.8$3,486,975 $3,566,492 $3,525,766 25.4$1,940,038 
Warehouse credit facilities - mortgage loans receivable(E)
1,248,361 1,248,361 Mar-25 to Dec-257.8 %1.11,514,842 1,537,452 1,537,452 1.21,337,010 
Government and government-backed securities(F)
9,834,668 9,834,668 Oct-24 to Oct-285.2 %0.410,064,737 9,906,690 10,108,728 4.58,152,469 
Non-agency RMBS(D)
648,861 648,861 Oct-24 to Jul-257.2 %0.414,304,071 975,726 1,043,274 6.3610,189 
Excess MSRs(E)
223,241 222,339 Sep-267.5 %2.055,052,726 329,516 381,550 5.8— 
CLOs(E)
180,286 178,965 Jan-30 to Oct-366.1 %9.1181,370 N/A180,764 9.1183,947 
SFR properties and commercial(E)
72,150 72,150 Dec-248.4 %0.2N/A154,668 154,668 N/A337,630 
Total secured financing agreements15,359,853 15,357,630 5.8 %0.712,561,283 
Secured Notes and Bonds Payable:
MSRs(G)
5,224,809 5,218,766 Dec-24 to Jul-297.1 %1.3559,499,920 7,370,826 8,977,729 6.04,800,728 
Servicer advance investments and Excess MSR(H)
259,451 259,451 Mar-266.9 %1.4297,741 330,137 341,303 8.2459,564 
Servicer advances(H)
2,265,780 2,265,104 Dec-24 to Sep-267.7 %1.32,566,366 2,612,839 2,612,839 0.62,254,369 
Residential mortgage loans— — —— %0.0— — — 0.0650,000 
Consumer loans(I)
685,117 665,030 Jun-28 to Sep-376.2 %3.8882,783 859,114 805,577 1.61,106,974 
SFR properties(J)
742,061 716,222 Mar-26 to Sep-274.2 %2.5N/A885,977 885,977 N/A789,174 
Mortgage loans receivable200,000 200,000 Jul-265.8 %1.8233,425 233,425 237,495 0.4200,000 
Secured facility - asset management75,000 71,168 Nov-258.8 %1.1N/AN/AN/AN/A69,121 
CLOs(E)
15,063 15,032 Jul-306.8 %5.818,468 N/A18,313 5.830,258 
Total secured notes and bonds payable9,467,281 9,410,773 6.9 %1.610,360,188 
Notes Payable of Consolidated CFEs:
Consolidated funds(K)
222,250 217,259 May-375.0 %4.1196,351 N/A228,873 N/A218,157 
Residential mortgage loans2,639,061 2,520,164 Jul-533.5 %26.13,072,082 N/A2,956,663 26.12,618,082 
Mortgage loans receivable861,949 862,380 Mar-39 to Sep-396.3 %14.7399,387 N/A411,006 0.7318,998 
Total notes payable of consolidated CFEs3,723,260 3,599,803 4.2 %22.23,155,237 
Total / Weighted Average$28,550,394 $28,368,206 6.0 %3.8$26,076,708 
(A)Net of deferred financing costs.
(B)Debt obligations with a stated maturity through the date of issuance were refinanced, extended or repaid.
(C)Associated with accrued interest payable of approximately $167.3 million as of September 30, 2024.
(D)Based on SOFR interest rates. Includes repurchase agreements and related collateral on Non-Agency securities retained through consolidated securitizations.
(E)All SOFR- or Euro Interbank Offered Rate (EURIBOR) based floating interest rates.
(F)Repurchase agreements are based on a fixed-rate. Collateral carrying value includes margin deposits.
(G)Includes $4.3 billion of MSR notes with an interest equal to the sum of (i) a floating rate index equal to SOFR, and (ii) a margin ranging from 2.5% to 3.3%; and $0.9 billion of MSR notes with fixed interest rates ranging 3.0% to 5.4%. The outstanding face amount of the collateral represents the UPB of the residential mortgage loans underlying the MSRs and MSR financing receivables securing these notes.
(H)Includes debt with an interest rate equal to the sum of (i) a floating rate index equal to SOFR, and (ii) a margin ranging from 1.6% to 3.2%. Collateral includes servicer advance investments, as well as servicer advances receivable related to the MSRs and MSR financing receivables owned by NRM and Newrez.
(I)Includes (i) SpringCastle debt, which is primarily composed of the following classes of asset-backed notes held by third parties: $159.9 million UPB of Class A notes with a coupon of 2.0% and $53.0 million UPB of Class B notes with a coupon of 2.7% and (ii) $467.8 billion of debt collateralized by the Marcus loans with an interest rate of SOFR plus a margin of 3.0%.
(J)Includes $742.1 million of fixed-rate notes with an interest rate ranging from 3.5% to 7.1%.
(K)Includes $120.0 million UPB of Class A notes with a fixed coupon of 4.3%, $70.0 million UPB of Class B notes with a fixed coupon of 6.0%, $15.0 million UPB of Class C notes with a fixed coupon of 6.8%, and $17.3 million UPB of Subordinated notes, held within consolidated funds (Note 20). Weighted average life is based on expected maturity.
General

Certain of the debt obligations included above are obligations of Rithm Capital’s consolidated subsidiaries, which own the related collateral. In some cases, such collateral is not available to other creditors of Rithm Capital Corp. The assets of consolidated CFEs can only be used to settle obligations and liabilities of the CFEs for which creditors do not have recourse to Rithm Capital Corp.

As of September 30, 2024, Rithm Capital has margin exposure on $15.4 billion of secured financing agreements. To the extent that the value of the collateral underlying these secured financing agreements declines, Rithm Capital may be required to post margin, which could significantly impact its liquidity.     
 
The following table summarizes activities related to the carrying value of debt obligations:
Servicer Advances and Excess MSRs(A)
MSRsReal Estate and Other SecuritiesResidential Mortgage Loans and REOConsumer LoansSFR Properties and CommercialMortgage Loans ReceivableAsset ManagementTotal
Balance at December 31, 2023
$2,713,933 $4,800,728 $8,762,658 $5,208,120 $1,106,974 $1,126,804 $1,856,008 $501,483 $26,076,708 
Secured Financing Agreements:
Borrowings223,241 — 61,424,724 44,018,325 — 52,361 2,552,282 17,349 108,288,282 
Repayments— — (59,703,853)(42,806,334)— (324,197)(2,640,931)(24,355)(105,499,670)
FX remeasurement— — — — — — — 1,985 1,985 
Capitalized deferred financing costs, net of amortization(902)— — 257 — 6,356 — 38 5,749 
Secured Notes and Bonds Payable:
Acquired borrowings, net of discount (Note 3)
190,596 — — — — — — — 190,596 
Borrowings1,868,236 1,482,159 — — — — — 8,524 3,358,919 
Repayments(2,248,482)(1,065,126)— (650,000)(449,550)(82,273)— (23,844)(4,519,275)
FX remeasurement— — — — — — — (45)(45)
Unrealized (gain) loss on notes, fair value— — — — 6,714 — — — 6,714 
Capitalized deferred financing costs, net of amortization272 1,005 — — 892 9,321 — 2,187 13,677 
Notes Payable of Consolidated CFEs:
Borrowings— — — (191,607)— — 861,949 — 670,342 
Repayments— — — 55,028 — — (324,062)— (269,034)
Discount on borrowings, net of amortization— — — (92,834)— — — — (92,834)
Unrealized (gain) loss on notes, fair value— — — 116,415 — — 4,824 (864)120,375 
Capitalized deferred financing costs, net of amortization — — — 15,080 — — 671 (34)15,717 
Balance at September 30, 2024$2,746,894 $5,218,766 $10,483,529 $5,672,450 $665,030 $788,372 $2,310,741 $482,424 $28,368,206 
(A)Rithm Capital net settles daily borrowings and repayments of the secured notes and bonds payable on its servicer advances.
Maturities
 
Contractual maturities of debt obligations, including the Senior Unsecured Notes, as of September 30, 2024, are as follows:
Year Ending
Nonrecourse(A)
Recourse(B)
Total
October 1 through December 31, 2024$789,211 $6,468,977 $7,258,188 
2025146,293 11,679,707 11,826,000 
20262,070,833 1,735,419 3,806,252 
2027651,229 430,000 1,081,229 
2028592,142 — 592,142 
2029 and thereafter3,557,334 1,479,249 5,036,583 
$7,807,042 $21,793,352 $29,600,394 
(A)Includes secured financing agreements, secured notes and bonds payable, unsecured notes net of issuance costs and notes payable of consolidated CFEs of $0.9 billion, $3.2 billion, $0.3 billion, and $3.0 billion, respectively.
(B)Includes secured financing agreements, secured notes and bonds payable, unsecured notes net of issuance costs and notes payable of consolidated CFEs of $14.5 billion, $6.3 billion, $1.1 billion, and $0.0 billion, respectively.

Borrowing Capacity

The following table represents borrowing capacity as of September 30, 2024:
Debt Obligations / CollateralBorrowing CapacityBalance Outstanding
Available Financing(A)
Secured Financing Agreements:
Residential mortgage loans, mortgage loans receivable, SFR and commercial notes receivable$5,181,455 $1,707,817 $3,473,638 
Loan originations5,627,000 2,764,979 2,862,021 
CLOs322,653 180,286 142,367 
Excess MSRs350,000 223,241 126,759 
Secured Notes and Bonds Payable:
MSRs6,182,688 5,224,809 957,879 
Servicer advances4,150,000 2,525,232 1,624,768 
SFR200,000 90,832 109,168 
Liabilities of Consolidated CFEs:
Consolidated funds52,500 — 52,500 
$22,066,296 $12,717,196 $9,349,100 
(A)Although available financing is uncommitted, Rithm Capital’s unused borrowing capacity is available if it has additional eligible collateral to pledge and meets other borrowing conditions as set forth in the applicable agreements, including any applicable advance rate.

Certain of the debt obligations are subject to customary loan covenants and event of default provisions, including event of default provisions triggered by certain specified declines in Rithm Capital’s equity or a failure to maintain a specified tangible net worth, liquidity or indebtedness to tangible net worth ratio. Rithm Capital was in compliance with all of its debt covenants as of September 30, 2024.

2029 Senior Unsecured Notes

On March 19, 2024, the Company issued in a private offering $775.0 million aggregate principal amount of senior unsecured notes due on April 1, 2029 (the “2029 Senior Notes”) at an issue price of 98.981%. Interest on the 2029 Senior Notes accrues at the rate of 8.000% per annum with interest payable semi-annually in arrears on each April 1 and October 1, commencing on October 1, 2024.
The notes become redeemable at any time and from time to time, on or after April 1, 2026, at a price equal to the following fixed redemption prices (expressed as a percentage of principal amount of the 2029 Senior Notes to be redeemed):

YearPrice
2026104.000 %
2027102.000 %
2028 and thereafter100.000 %

Prior to April 1, 2026, the Company is entitled at its option on one or more occasions to redeem the 2029 Senior Notes in an aggregate principal amount not to exceed 40% of the aggregate principal amount of the 2029 Senior Notes originally issued prior to the applicable redemption date at a redemption price of 108.000%, plus accrued but unpaid interest, if any, to, but not including, the applicable redemption date with the net cash proceeds from one or more Qualified Equity Offerings (as defined in the Indenture, dated March 19, 2024, pursuant to which the 2029 Senior Notes were issued (the “2029 Notes Indenture”)).

Proceeds from the offering were approximately $759 million, net of discount and commissions and estimated offering expenses payable by the Company. The Company incurred fees of approximately $9.1 million in relation to the issuance of the 2029 Senior Notes. These fees were capitalized as debt issuance cost and presented as part of unsecured notes, net of issuance costs on the consolidated balance sheets. In connection with the 2029 Senior Notes, for the three and nine months ended September 30, 2024, the Company recognized interest expense of $16.3 million and $34.6 million, respectively. At September 30, 2024, the unamortized discount and debt issuance cost was approximately $15.5 million.

The 2029 Senior Notes are senior unsecured obligations and rank pari passu in right of payment with all of the Company’s existing and future senior unsecured indebtedness and senior unsecured guarantees. At the time of issuance, the 2029 Senior Notes were not guaranteed by any of the Company’s subsidiaries and none of its subsidiaries are required to guarantee the 2029 Senior Notes in the future, except under limited specified circumstances.

The 2029 Senior Notes contain financial covenants and other non-financial covenants, including, among other things, limits on the ability of the Company and its restricted subsidiaries to incur certain indebtedness (subject to various exceptions), requires that the Company maintain Total Unencumbered Assets (as defined in the 2029 Notes Indenture) of not less than 120% of the aggregate principal amount of the outstanding unsecured debt of the Company or its subsidiaries and imposes certain requirements in order for the Company to merge or consolidate with or transfer all or substantially all of its properties and assets to another person, in each case subject to certain qualifications set forth in the 2023 Notes Indenture. If the Company were to fail to comply with these covenants, after the expiration of the applicable cure periods, the debt maturity could be accelerated or other remedies could be sought by the lenders. As of September 30, 2024, the Company was in compliance with all covenants.

In the event of a Change of Control or Mortgage Business Triggering Event (each as defined in the 2029 Notes Indenture), each holder of the 2029 Senior Notes will have the right to require the Company to repurchase all or any part of the outstanding balance at a purchase price of 101% of the principal amount of the 2029 Senior Notes, plus accrued and unpaid interest, if any, to, but not including, the date of such repurchase.

2025 Senior Unsecured Notes

On September 16, 2020, the Company issued in a private offering $550.0 million of aggregate principal amount of senior unsecured notes due on October 15, 2025 (the “2025 Senior Notes” and, together with the 2029 Senior Notes, the “Senior Unsecured Notes”) for net proceeds of $544.5 million. Interest on the 2025 Senior Notes accrues at the rate of 6.250% per annum with interest payable semi-annually in arrears on each April 15 and October 15, commencing on April 15, 2021.

The notes became redeemable at any time and from time to time, on or after October 15, 2022. The Company may redeem the notes at a fixed redemption price of 101.563% from October 15, 2023 to October 16, 2024 and at a fixed redemption price of 100.000% after October 14, 2024, in each case, plus accrued and unpaid interest, if any, to, but not including the applicable redemption date.
The Company incurred fees of approximately $8.3 million in relation to the issuance of the 2025 Senior Notes which were capitalized as debt issuance cost and are presented as part of unsecured notes, net of issuance costs on the consolidated balance sheets. In connection with the 2025 Senior Notes, for the three months ended September 30, 2024 and 2023, the Company recognized interest expense of $4.3 million and $8.7 million, respectively, and, for the nine months ended September 30, 2024 and 2023, $16.6 million and $25.7 million, respectively. At September 30, 2024, the unamortized debt issuance costs was approximately $1.8 million.

The 2025 Senior Notes are senior unsecured obligations and rank pari passu in right of payment with all of the Company’s existing and future senior unsecured indebtedness and senior unsecured guarantees. At the time of issuance, the 2025 Senior Notes were not guaranteed by any of the Company’s subsidiaries and none of its subsidiaries are required to guarantee the 2025 Senior Notes in the future, except under limited specified circumstances.

The 2025 Senior Notes contain financial covenants and other non-financial covenants, including, among other things, limits on the ability of the Company and its restricted subsidiaries to incur certain indebtedness (subject to various exceptions), requires that the Company maintain Total Unencumbered Assets, as defined in the Indenture, dated September 16, 2020, pursuant to which the 2025 Senior Notes were issued (the “2025 Notes Indenture”) of not less than 120% of the aggregate principal amount of the outstanding unsecured debt of the Company and its subsidiaries, and imposes certain requirements in order for the Company to merge or consolidate with or transfer all or substantially all of its assets to another person, in each case subject to certain qualifications set forth in the 2025 Notes Indenture. If the Company were to fail to comply with these covenants, after the expiration of the applicable cure periods, the debt maturity could be accelerated or other remedies could be sought by the lenders. As of September 30, 2024, the Company was in compliance with all covenants.

In the event of a Change of Control (as defined in the 2025 Notes Indenture), each holder of the 2025 Senior Notes will have the right to require the Company to repurchase all or any part of the outstanding balance at a purchase price of 101% of the principal amount of the 2025 Senior Notes repurchased, plus accrued and unpaid interest, if any, to, but not including the date of such repurchase.

In connection with the offering of the 2029 Senior Notes, the Company tendered for and repurchased $275.0 million aggregate principal amount of its 2025 Senior Notes for cash in a total amount of $282.4 million, inclusive of an early tender premium of $30 per $1,000 principal amount of 2025 Senior Notes and accrued and unpaid interest. Following such tender offer, $275.0 million aggregate principal amount of 2025 Senior Notes remains outstanding.

Tax Receivable Agreement

At the time of its initial public offering in 2007, Sculptor entered into a tax receivable agreement (“TRA”) with the former holders of units in Sculptor’s operating partnerships (the “TRA Holders”). The TRA provides for the payment by Sculptor to the TRA Holders of a portion of the cash savings in US federal, state and local income tax that Sculptor realizes as a result of certain tax benefits attributable to taxable acquisitions by Sculptor (and certain affiliates and successors) of Sculptor operating partnership units.

The TRA includes certain “change of control” assumptions that became applicable as a result of the Sculptor Acquisition, including the assumption that Sculptor (or its successor) has sufficient taxable income to use the relevant tax benefits. As a result, payments under the TRA will be calculated without regard to Sculptor’s ability to actually use tax assets (including net operating losses), the use of which may be significantly limited and may therefore exceed the actual tax savings to Sculptor of the associated tax assets.

Effective in the third quarter of 2024, Rithm Capital’s taxable subsidiaries file combined federal and state returns. As a result, the estimated undiscounted future payment under the TRA was $243.9 million as of September 30, 2024. The carrying value of the TRA liability measured at amortized cost was $168.2 million as of September 30, 2024 with interest expense recognized under the effective interest method. The TRA liability is recorded in unsecured notes, net of issuance costs on the consolidated balance sheets.
The table below presents the Company’s estimate as of September 30, 2024, of the maximum undiscounted amounts that would be payable under the TRA using the assumptions described above. In light of the numerous factors affecting Sculptor’s obligation to make such payments, the timing and amounts of any such actual payments may differ materially from those presented in the table.
Year EndingPotential Payments Under TRA
October 1 through December 31, 2024$— 
202529,821 
202616,530 
202718,060 
202815,062 
2029 and thereafter164,438 
$243,911