Rithm Capital Bolsters Capital Structure with $190 Million Preferred Stock Offering

Rithm Capital Prices $190 Million Preferred Stock Offering

Rithm Capital Corp. (NYSE: RITM), a prominent global alternative asset manager specializing in credit and real estate assets, announced the pricing of an underwritten public offering of 7,600,000 shares of its 8.75% Series E Fixed-Rate Cumulative Redeemable Preferred Stock. This offering, priced at a liquidation preference of $25.00 per share, is set to generate approximately $190,000,000 in gross proceeds, further strengthening the company's capital base.

Offering Details and Financial Mechanics

The newly issued Series E Preferred Stock carries a perpetual structure, featuring a fixed cumulative dividend at an annual rate of 8.75%, based on its $25.00 liquidation preference. Dividends are scheduled to be payable quarterly, with the first payment expected around February 15, 2026. This instrument is non-redeemable by Rithm Capital prior to November 15, 2030, except under specific conditions related to maintaining REIT compliance or a Change of Control event. The shares are anticipated to be listed on the New York Stock Exchange under the symbol "RITM PR E". The transaction is expected to close on September 25, 2025, subject to customary closing conditions. Additionally, the underwriters have been granted a 30-day option to purchase up to an additional 1,140,000 shares, which could provide an extra $28,500,000 in gross proceeds if fully exercised.

Leading financial institutions serving as joint bookrunners for the offering include Morgan Stanley & Co. LLC, J.P. Morgan Securities LLC, RBC Capital Markets, LLC, UBS Investment Bank, Wells Fargo Securities, LLC, BTIG, LLC, Citigroup Global Markets Inc., Goldman Sachs & Co. LLC, and Piper Sandler & Co.

Strategic Rationale and Capital Structure Optimization

Rithm Capital's decision to issue Series E Preferred Stock is a calculated move to optimize its capital structure and enhance liquidity within a dynamic market environment. The proceeds from this offering are designated for general corporate purposes and investments, allowing the company to secure stable, long-term financing without immediately diluting common shareholders' equity or significantly increasing its debt burden. This strategy is particularly relevant for maintaining its qualification as a Real Estate Investment Trust (REIT).

The 8.75% fixed dividend rate offers predictability, shielding the company from potential future interest rate hikes while presenting an attractive yield for income-focused investors. This rate is notably higher than the initial 7.00% rate of Rithm's existing Series D Preferred Stock and surpasses benchmarks like the ICE BofA Fixed Rate Preferred Securities Index, which yielded over 5.5% as of mid-2025. By introducing this preferred equity, which ranks senior to common equity for dividend and liquidation purposes but junior to senior debt, Rithm aims to reduce its overall financial leverage. The company's debt-to-equity ratio, which stood at 4.50 as of June 2025, is projected to decrease to approximately 3.93 following this issuance, strengthening asset coverage and supporting ongoing debt refinancing efforts.

Broader Implications and Growth Trajectory

This offering signals Rithm Capital's proactive approach to capital allocation and its strategic expansion within the alternative asset management space. The company, which operates through subsidiaries like Newrez, Genesis Capital, and Sculptor Capital Management, focuses on diverse areas including asset-based finance, residential and commercial real estate lending, mortgage servicing rights (MSRs), and structured credit. The bolstered capital base will support several key initiatives, including the acquisition of Paramount Group for approximately $1.6 billion and Crestline Management, an alternative investment manager with around $17 billion in assets under management. Furthermore, the proceeds will contribute to funding residential transitional loans, with potential commitments ranging from $500 million to $1.5 billion.

For the broader market, the successful issuance of preferred stock by a REIT like Rithm Capital suggests a healthy investor appetite for income-generating securities, potentially indicating positive sentiment and stability expectations within the real estate and mortgage sectors. The 8.75% dividend yield on the Series E could also serve as a benchmark for future preferred stock offerings in the REIT industry. While the fixed dividend obligation introduces a claim on net income, Rithm's historical Return on Equity (ROE) of 14% in 2024 and its consistent 13-year common dividend payment track record demonstrate operational efficiency and capacity to manage these costs as it expands its asset base.

Rithm Capital maintains a market capitalization of $6.5 billion and has recently traded near its 52-week high of $12.74. The common stock currently yields 8.14% and the company has achieved 16.59% revenue growth over the last twelve months, trading at a P/E ratio of 9.45.