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DEBT OBLIGATIONS
 3 Months Ended
Mar. 31, 2024
Debt Disclosure [Abstract]  
DEBT OBLIGATIONS DEBT OBLIGATIONS
 
The following table summarizes Secured Financing Agreements, Secured Notes and Bonds Payable and debt obligations related to consolidated funds:
March 31, 2024December 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)
$3,087,260 $3,087,196 Apr-24 to Feb-266.9 %0.7$3,514,478 $3,522,074 $3,438,132 28.8$1,940,038 
Warehouse Credit Facilities-Mortgage Loans Receivable(E)
1,457,135 1,457,135 May-24 to Dec-258.1 %1.51,749,029 1,761,010 1,761,010 1.21,337,010 
Agency RMBS or US Treasuries(F)
12,557,569 12,557,569 Apr-24 to May-255.4 %0.412,962,940 12,773,350 12,817,767 6.88,152,469 
Non-Agency RMBS(E)
645,381 645,381 Apr-24 to Oct-287.4 %0.615,812,493 974,002 1,002,578 7.0610,189 
SFR Properties(E)
27,914 27,914 Dec-248.2 %0.7N/A60,054 60,054 N/A20,534 
CLOs(G)
179,858 178,527 Jan-30 to Jul-356.3 %8.7180,890 180,890 178,475 8.7183,947 
Commercial Notes Receivable323,452 317,324 Dec-246.5 %0.7429,240 364,977 364,977 N/A317,096 
Total Secured Financing Agreements$18,278,569 $18,271,046 6.0 %0.6$12,561,283 
Secured Notes and Bonds Payable
Excess MSRs(E)
169,603 169,603  Oct-258.8 %1.458,577,476 226,825 261,420 5.8181,522 
MSRs(H)
4,458,873 4,452,608 Dec-24 to Nov-277.4 %1.7521,148,213 6,480,406 8,657,165 7.64,800,728 
Servicer Advance Investments(I)
270,705 270,705 Jul-24 to Mar-267.3 %1.9313,271 352,275 374,511 8.4278,042 
Servicer Advances(I)
2,154,019 2,153,983 May-24 to Mar-267.2 %1.82,648,186 2,586,079 2,586,079 0.72,254,369 
Residential Mortgage Loans(J)
650,000 650,000 May-246.8 %0.1648,077 665,862 669,238 6.7650,000 
Consumer Loans(K)
971,627 943,821 Jun-28 to Sep 376.8 %4.11,154,642 1,123,851 1,103,799 1.81,106,974 
SFR Properties(L)
832,972 791,612 Mar-26 to Sep-274.1 %3.1N/A946,603 946,603 N/A789,174 
Mortgage Loans Receivable(M)
524,060 524,060 Jul 26 to Dec-265.7 %2.6565,996 565,996 565,996 0.6518,998 
Secured Facility- Asset Management75,000 69,652 Nov-258.8 %1.6N/AN/AN/AN/A69,121 
CLOs(G)
19,364 19,331 May-30 to Oct-346.8 %7.323,013 19,541 22,099 7.330,258 
Total Secured Notes and Bonds Payable$10,126,223 $10,045,375 6.9 %2.0$10,679,186 
Liabilities of Consolidated Funds(N)
Consolidated funds(O)
$222,250 $218,123 May-375.0 %4.6206,141 N/A204,248 N/A218,157 
Total / Weighted Average$28,627,042 $28,534,544 6.3 %1.2$23,458,626 
(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 $134.3 million as of March 31, 2024.
(D)Includes $224.7 million with an average fixed-rate of 5.0% with the remaining based on SOFR interest rates.
(E)SOFR-based floating interest rates.
(F)Repurchase agreements have a fixed-rate. Includes financing on and collateral for US Treasuries purchased to cover short sales. Collateral carrying value includes margin deposits.
(G)Repurchase agreements and loans based on SOFR- or Euro Interbank Offered Rate (EURIBOR) floating interest rate.
(H)Includes $3.5 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 3.7%; and $1.0 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.
(I)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 1.5% to 3.7%. Collateral includes servicer advance investments, as well as servicer advances receivable related to the MSRs and MSR financing receivables owned by NRM and Newrez.
(J)Represents $650.0 million securitization backed by a revolving warehouse facility to finance newly originated first-lien, fixed- and adjustable-rate residential mortgage loans with an interest rate equal to SOFR plus a margin of 1.2%. Collateral carrying value includes cash held in the securitization trust required to meet collateral requirements.
(K)Includes (i) SpringCastle debt, which is primarily composed of the following classes of asset-backed notes held by third parties: $191.7 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) $721.9 billion of debt collateralized by the Marcus loans with an interest rate of SOFR plus a margin of 3.0%.
(L)Includes $833.0 million of fixed-rate notes with an interest rate ranging from 3.5% to 7.1%.
(M)Includes $238.1 million with an interest rate at an average fixed-rate of 4.6% with the remaining having SOFR-based floating interest rates.
(N)Included within accrued expenses and other liabilities in the Consolidated Balance Sheets (Note 13).
(O)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.

As of March 31, 2024, Rithm Capital has margin exposure on $18.3 billion 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)
MSRsCommercial Notes ReceivableReal Estate and Other SecuritiesResidential Mortgage Loans and REOConsumer LoansSFR PropertiesMortgage Loans ReceivableAsset ManagementTotal
Balance at December 31, 2023$2,713,933 $4,800,728 $317,096 $8,762,658 $2,590,038 $1,106,974 $809,708 $1,856,008 $501,483 $23,458,626 
Secured Financing Agreements
Borrowings— — — 22,495,882 11,289,428 — 7,380 750,498 — 34,543,188 
Repayments— — — (18,055,590)(10,142,463)— — (630,375)(1,579)(28,830,007)
FX remeasurement— — — — — — — — (3,877)(3,877)
Capitalized deferred financing costs, net of amortization
— — 228 — 193 — — — 36 457 
Secured Notes and Bonds Payable
Borrowings558,186 200,000 — — — — — — 3,080 761,266 
Repayments(678,740)(548,902)— — — (163,039)(420)— (14,096)(1,405,197)
FX remeasurement— — — — — — — — (48)(48)
Unrealized (gain) loss on notes, fair value— — — — — (411)— 5,064 — 4,653 
Capitalized deferred financing costs, net of amortization
912 782 — — — 297 2,858 — 668 5,517 
Liabilities of Consolidated Funds(B)
Acquired borrowing, net of discount— — — — — — — — — — 
Unrealized (gain) loss on notes, fair value— — — — — — — — (34)(34)
Balance at March 31, 2024$2,594,291 $4,452,608 $317,324 $13,202,950 $3,737,196 $943,821 $819,526 $1,981,195 $485,633 $28,534,544 
(A)Rithm Capital net settles daily borrowings and repayments of the secured notes and bonds payable on its servicer advances.
(B)Included within accrued expenses and other liabilities in the Consolidated Balance Sheets (Note 13).

Maturities
 
Contractual maturities of debt obligations as of March 31, 2024 are as follows:
Year Ending
Nonrecourse(A)
Recourse(B)
Total
April 1 through December 31, 2024$1,720,835 $17,491,706 $19,212,541 
2025258,952 2,845,222 3,104,174 
20262,030,971 1,731,645 3,762,616 
2027734,614 420,000 1,154,614 
2028846,839 — 846,839 
2029 and thereafter546,258 1,050,000 1,596,258 
$6,138,469 $23,538,573 $29,677,042 
(A)Includes secured financing agreements, secured notes and bonds payable, and senior unsecured notes, net of issuance costs of $1.0 billion, $4.9 billion and $0.2 billion, respectively.
(B)Includes secured financing agreements, secured notes and bonds payable, and senior unsecured notes, net of issuance costs of $17.3 billion, $5.8 billion and $0.5 billion, respectively.

Borrowing Capacity

The following table represents borrowing capacity as of March 31, 2024:
Debt Obligations / CollateralBorrowing CapacityBalance Outstanding
Available Financing(A)
Secured Financing Agreements
Residential mortgage loans, mortgage loans receivable, SFR and commercial notes receivable$6,367,565 $2,430,849 $3,936,716 
Loan originations5,227,000 2,464,912 2,762,088 
CLOs315,790 179,858 135,932 
Secured Notes and Bonds Payable
Excess MSRs286,380 169,603 116,778 
MSRs5,938,911 4,458,873 1,480,038 
Servicer advances3,805,000 2,424,724 1,380,276 
SFR296,639 194,997 101,642 
Liabilities of Consolidated Funds
Consolidated funds52,500 — 52,500 
$22,289,785 $12,323,816 $9,965,970 
(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 March 31, 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. For the three months ended March 31, 2024, the Company recognized interest expense of $2.1 million. At March 31, 2024, the unamortized discount and debt issuance cost was approximately $16.9 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 debt agreement. 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 March 31, 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”) 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. For the three months ended March 31, 2024, the Company recognized interest expense of $8.0 million. At March 31, 2024, the unamortized debt issuance costs was approximately $2.7 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 debt agreement. 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 March 31, 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 acquisition of Sculptor, 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.

As of March 31, 2024, the estimated undiscounted future payment under the TRA was $267.9 million. The carrying value of the TRA liability measured at amortized cost was $174.8 million as of March 31, 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 March 31, 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
April 1 through December 31, 2024$11,591 
202529,819 
202617,374 
202718,994 
202815,940 
2029 and thereafter174,203 
$267,921