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BUSINESS ACQUISITIONS | 3 Months Ended
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Mar. 31, 2025
Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract] |
BUSINESS ACQUISITIONS | BUSINESS ACQUISITIONS Acquisition of Computershare Mortgage Services Inc. Rithm Capital completed the acquisition of Computershare Mortgage Services Inc. (“Computershare”) and certain affiliated companies, including Specialized Loan Servicing LLC (“SLS”), and the simultaneous merger of SLS into Newrez on May 1, 2024 (the “Computershare Acquisition”). 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 the Computershare Acquisition during the second quarter of 2024:
Total Consideration |  | $ | 715,458 |
Assets: |  |
Residential mortgage loans, held-for-sale |  | 2,402 |
Servicer advances receivable |  | 269,484 |
Mortgage servicing rights, at fair value |  | 700,207 |
Cash and cash equivalents |  | 101,993 |
Restricted cash |  | 2,271 |
Other assets(A) |  | 83,056 |
Total Assets Acquired |  | 1,159,413 |
Liabilities: |  |
Accrued expenses and other liabilities |  | 225,944 |
Secured notes and bonds payable |  | 190,596 |
Total Liabilities Assumed |  | 416,540 |
Net Assets |  | 742,873 |
Bargain Purchase Gain |  | $ | 27,415 |
(A)Includes $16.0 million of intangible assets in the form of customer relationships. This intangible is being amortized over a finite life of 4.5 years. Rithm Capital acquired 100% of the outstanding equity interests of Computershare and certain affiliated companies, including SLS, for cash consideration of $715.5 million. At the time of acquisition, SLS merged into Newrez. 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, Business Combinations. Based on the reassessment, the transaction resulted in a Bargain Purchase gain of $27.4 million, which has been included in other income (loss), net within the consolidated statements of operations for the year ended December 31, 2024. The Bargain Purchase gain was primarily driven by the change in fair value of the acquired MSRs between the signing and closing dates of the acquisition. 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 the assessment of fair value are related to 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. Intangible assets acquired consist of customer relationships. Rithm Capital amortizes finite-lived customer relationships on a straight-line basis over their respective useful lives. The weighted average life of the total acquired identifiable intangible assets is 4.5 years. The following table presents the details of identifiable intangible assets acquired:
| Estimated Useful Life |  | Amount
Customer Relationships | 4.5 |  | $ | 16,000 |
Total Identifiable Intangible Assets |  |  | $ | 16,000 |
Measurement Period Adjustments The following table summarizes the provisional amounts recognized related to the Computershare Acquisition as of the acquisition date, as well as the measurement period adjustments made in the fourth quarter of 2024 to arrive at the revised preliminary allocation of the total consideration paid to acquire the assets and assume the liabilities:
|  | Preliminary Amounts as of the Acquisition Date |  | Subsequent Adjustments to Fair Value(A) |  | Revised Preliminary Amounts as of the Acquisition Date
Total Consideration |  | $ | 708,026 |  |  | $ | 7,432 |  |  | $ | 715,458 |
Assets: |  |  |  |  |  |
Residential mortgage loans, held-for-sale |  | 2,402 |  |  | — |  |  | 2,402 |
Servicer advances receivable |  | 275,782 |  |  | (6,298) |  |  | 269,484 |
Mortgage servicing rights, at fair value |  | 696,462 |  |  | 3,745 |  |  | 700,207 |
Cash and cash equivalents |  | 102,011 |  |  | (18) |  |  | 101,993 |
Restricted cash |  | 2,237 |  |  | 34 |  |  | 2,271 |
Other assets |  | 84,028 |  |  | (972) |  |  | 83,056 |
Total Assets Acquired |  | 1,162,922 |  |  | (3,509) |  |  | 1,159,413 |
Liabilities: |  |  |  |  |  |
Accrued expenses and other liabilities |  | 236,141 |  |  | (10,197) |  |  | 225,944 |
Secured notes and bonds payable |  | 190,596 |  |  | — |  |  | 190,596 |
Total Liabilities Assumed |  | 426,737 |  |  | (10,197) |  |  | 416,540 |
Net Assets |  | 736,185 |  |  | 6,688 |  |  | 742,873 |
Bargain Purchase Gain |  | $ | 28,159 |  |  | $ | (744) |  |  | $ | 27,415 |
(A)The adjustment to total consideration was primarily driven by changes in valuation of MSRs acquired and resolutions with seller with respect to servicing fee receivables (as reflected in other assets) and legal obligations (as reflected in accrued expenses and other liabilities). Unaudited Supplemental Pro Forma Financial Information The following table presents unaudited pro forma combined revenues and income before income taxes for the three months ended March 31, 2024 prepared as if the Computershare Acquisition had been consummated on January 1, 2023:
Pro Forma |  | Three Months Ended March 31, 2024 |  |  |  |
Revenues |  | $ | 1,377,640 |  |  |  |  |
Income before income taxes |  | 400,991 |  |  |  |  |
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 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.

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- 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
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