Welcome to the Rhythm Capital First Quarter 2026 Earnings Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1, on a touch-tone phone. To withdraw your question, please press star, then 2. Please note this event is being recorded. I would now like to turn the conference over to Emily Holke, Deputy General Counsel. Please go ahead.

Thank you and good morning, everyone. I'd like to thank you for joining us today for Rhythm Capital's first quarter 2026 earnings call. Joining me today are Michael Nirenberg, Chairman, CEO, and President of Rhythm Capital, Nick Santoro, Chief Financial Officer of Rhythm Capital, and Barron Silverstein, President of NURES. Throughout the call, we are going to reference the earnings supplement that was posted this morning to the Rhythm Capital website, www.rhythmcap.com. If you've not already done so, I'd encourage you to download the presentation now. I would like to point out that certain statements made today will be forward-looking statements. These statements, by their nature, are uncertain and may differ materially from actual results. I encourage you to review the disclaimers in our press release and earnings supplement regarding forward-looking statements and to review the risk factors contained in our annual and quarterly reports filed with the SEC. In addition, we will be discussing some non-GAAP financial measures during today's call. Reconciliations of these measures to the most directly comparable GAAP measures can be found in our earnings supplement. With that, I'll turn the call over to Michael.

Thanks, Emma. Good morning, everyone, and thanks for joining us. I'm going to open my remarks and go a little bit into the credit markets for a minute, and then we'll get into the supplement, which has been posted online. Barron Silverstein will cover the mortgage company Peter Brimley will cover Ellicore which was formerly known as paramount we rebranded the you know the real estate company last night We're excited about that and Peter has a lot of great stuff to discuss So for the company another solid quarter for a company demonstrating the power of the franchise activity levels across the board were robust The firm, you know, as we stand today, is extremely well positioned to take advantage of market dislocations as the combination of geopolitical risks and private credit headlines give us the opportunity to deploy more capital across the firm in both the ABF and credit space. As market participants pull back, this will play to our advantage. The majority of our capital, interactive management businesses with institutional partners. As a firm, the exposure we have to software remains low. It is important to note we have not seen any notable DQs in our credit exposure across the firm. We do not see systemic risk in private credit. From our seat, this is a sentiment-driven dislocation that will play into our ability to look for opportunities in the credit space. When you look at direct lending, 80% of direct lending sits in institutional drawdown funds. systemic risk here will be contained. Large BDC portfolios have concentrations of approximately 20 percent in software. While saying that, defaults in the largest BDC and sponsors sit below the five-year historical average of 1.1 percent. So while saying all this, what's the opportunity for sculptor and crest line? We're structured to take advantage of dislocations. It's that simple. While saying all of this, when we think about dislocations, markets are rebounded. SMC is at all-time highs. Securitization markets remain robust, and there's lots of demand everywhere for ABF products. During the quarter, we did $2 billion of securitization, and we see a consumer that remains healthy, particularly in our mortgage company, as we look at the 4 million customers that we service. In our Paramount portfolio, which is again now called Delacour, leasing activities are excellent, and Peter will speak to that. New York City is now roughly 93% leased in San Francisco's on fire as a result of the AI boom in the need for office. San Francisco saw the strongest quarter of activity since 2019 and before. Availability declined by 600 basis points year over year. On the Paramount portfolio, the team did a great job in 25. They leased approximately 1.75 million square feet. 76 or 75 percent of the activity was in New York City with the rest in San Fran. So before I go into the supplement, I want to lay out rhythm, our companies, and how to think about us. As everybody knows, we started the company in the spring of 2013 at Fortress. We started with a billion dollars of permanent capital, and since then we've created the following 8 billion of permanent capital all raised in the public market 110 billion plus of assets 60 billion managed for third parties that's our asset management business we have a 50 billion dollar balance sheet that not only supports our operating companies also supports our asset management business we have one of the top five mortgage companies in the United States We started that from scratch in 2018. We have 4 million customers, as I pointed out before. We own one of the top construction slash residential transition lenders in the U.S., known as Genesis Capital. We're the fourth largest owner of office in New York City. And again, that's through the acquired Paramount Group, which once again was rebranded to Ellicor. And we paid north of $6.5 billion of dividends. So what does all this mean and where are we going? We'll continue to lead with performance, grow relationships with our LPs, perform as expected, and do all we can to increase our value prop for our public equity holders. You heard it before, and you'll hear it again, that some of the parts in our view is much greater than the whole. Now I'll refer to the supplement, which has been posted online. I'm going to start on page three. So when you look at the firm, we have really what I would say five core operating businesses. really six. Sculptor and Crestline are two asset management divisions couldn't be more proud couldn't be more excited where we sit today with both of those very complementary strategies different one is based in Fort Worth one is based in New York City as you know with global offices everywhere. Assets managed approximately 60 billion with more funds being raised daily. Ellicor formerly known as Paramount, Class A owner-operator of offices in New York and San Francisco. Peter will talk to that. Business is doing great. NuRes, our mortgage company, again, number three in total unit service in the United States, including the large money center banks, and a top five U.S. mortgage lender. Barron will speak to that. And then Genesis Capital, which is our residential transitional lender. It's also a large multifamily originator, and I'll speak to that in a little bit. And then you have RITM, which sits obviously in the investment portfolio and at the REIT level. Page four for the quarter, what I would say is as expected, 51 cents per diluted share. When you look at our EAD, $289.6 million in earnings, 17% return in equity. Gap net income is always going to be noisy due to hedges moving in and out as we hedge up our MSR portfolios. $67.8 million of gap net income, $0.12 per diluted share, and a 4% return on equity. Book value, we ended the quarter at $7 billion or $12.51. When you think about it, we pay $0.25 in dividends. Effectively, we've grown book value quarter over quarter net-net. And that's truly a testament to our team as we think about the macro strategy and the markets in general. Dividend yield, 10.5%, 25 cents per common share in cash and liquidity. We ended the quarter at approximately $1.4 billion. When you look at the quarter in review, and we think about rhythm asset management, which is the so-called parent, we deployed over $2 billion in corporate credit. ABF investments over one, and in ABF investments in the Sculptor Real Estate Fund 5, they've committed $1 billion in the first quarter alone in 2026, keep in mind coming off a great successful fundraise of $4.6 billion on their latest fund. Great brand, great track record, and a great business for us. Sculptor had gross inflows of $600 million, ending the quarter with $37 billion of AUM. When you look at Crestline, overall performance, terrific, you know, outperforming our initial underwriting, grew management fee revenue by 16% year-over-year in the first quarter of 26, and will continue to grow that business as we see the opportunities in the credit space. Genesis Capital, when you look to the bottom left, best quarter in history. keep in mind on this business we bought from Goldman in 22 at the time we bought this business they were doing 1.7 billion of total loans for the entire year so we did 1.6 billion in the first quarter we added 118 new sponsors P&L looks great and credit performance remains strong we will not sacrifice production for credit just so we're on the same page new res mortgage you know our mortgage company servicing portfolio ended the quarter approximately at 800 $250 billion, that includes third-party, funded volume $15.5 billion, generated $274 million of pre-tax income with a 19% annualized operating ROE in the first quarter. And then on the investment portfolio, robust around a non-QM business. We originate quite a bit there in the mortgage company. We did $2 billion of securitizations. During the quarter, we invested $3 billion in different mortgage assets. that includes non-QM and residential transition loans, and we also purchased $140 million of home improvement loans under our flow agreement with Upgrade, bringing the total purchase since Q3 to $667 million dollars. When you look at the power of the platform again across the board, we have, what I would say is we have pretty much everything we need from an asset management business will grow in areas that we don't feel you know we have that will grow in areas where we have core competencies so what that will likely mean is we'll add teams not businesses because we're extremely happy where we sit between sculptor crest line and now known as Ellicor as we grow our real estate presence so when you look across the board we're everything in credit where everything in the multi strat business on the real estate side there's roughly 11 billion of AUM in the house. And in asset-based finance, I would expect us to grow that significantly with our third-party partners globally. When you look at the Sculptor business on page eight, again, we couldn't be more happy where we sit today. We're two and a half years in. Total AUM, 37 billion. Most importantly, performance. We are going to lead with performance. We're not going to lead with AUM. We have a fundamental belief that you could only deploy so much capital into the markets when the markets give you the ability to create what I would call alpha or slash outsized returns. That's how we view the business. So while all of us want to grow AUM, we need to lead with performance first. Could it be more proud of the team? Could it be more proud of the business? I'm really excited where that business is going to go. Crestline, a red asset management business, which we closed on in December of 25. Total AUM, a little under $20 billion, a ton of investors across the platform. You know, I was just in Tokyo a week and a half ago meeting with both Crestline and Sculptor investors at a conference. You know, in Asia or in Tokyo, we have 15 different LPs invested in both the Crestline platform and the Sculptor platform. So real global brands, the teams do a great job when you look at this business. We are well positioned to take advantage of any dislocations in the markets today. Investment performance, if you look to the bottom left side of the page, capital solutions 13.5 net since 22, direct lending 12 and change net since 23. So overall performance, very good. I mentioned earlier about software. Only 7% of invested assets are classified in software. As we look to Ellicor, I'm going to turn it over to Peter. He'll give you some color on the real estate business, and then after that I'll talk about Genesis, and then Barron will take the new reds portion.

Thank you, Michael. Paramount Group, as Michael just now said, has become Ellicor Properties. I'm on page 11. A new name and a new identity, but a continuation of the same commitment to operating Class A real estate in New York and San Francisco. This new chapter reflects our intention to leverage the operational strength of the Ellicor team and the financial strength of Rhythm Capital to further enhance our trophy quality portfolio, ensuring that we continue to outperform and attract the world's leading companies. Companies in both New York and San Francisco are choosing to elevate the quality of their real estate to enhance collaborative culture, energize their teams, and drive productivity. It is among the most pronounced trends in our two markets. The quality of our portfolio coupled with our planned significant investments will ensure we continue to attract the most discerning companies across a variety of industries well into the future. This rebrand is an acknowledgment of the evolution of the workplace and signifies a renewed commitment to delivering a leading workplace experience, one where world-class amenities are integrated into our buildings, resulting in a best-in-class, differentiated experience for our tenants. This is a story of continuity and acceleration. The Ellicor Properties team is energized and working hard to execute on our exciting plans. Turning to page 12, Ellicor Property highlights. Ellicor owns, manages, and operates high-quality, centrally located Class A office properties in New York and San Francisco. The portfolio is managed by a senior leadership team with deep knowledge of our markets and a track record of success. Ellicore is a vertically integrated platform with in-house expertise in all facets of the business, including leasing, asset management, acquisitions, property management, redevelopment, and financing. Since the acquisition on December 19, 2025, we have identified operating efficiencies to increase our annual management company EBITDA by approximately $40 million. dollars. Ellicor's portfolio consists of 10 core assets totaling 9.9 million square feet. The core portfolio is currently 85.7% leased at share with an average in-place rent of $90 per square foot at share and a weighted average lease term of 8.4 years at share. Key highlights include leasing. Year-to-date, we have executed leases and have leases pending on more than 360,000 square feet across the New York and San Francisco portfolio, with weighted average initial rent of $94.64 per square foot, 14.9% higher than our weighted average initial rents in 2025. Capital markets. Rhythm acquired the portfolio for $585 per square foot, an increasingly attractive basis given the recent transaction activity in both New York and San Francisco. JV opportunities. Earlier this year, we launched a JV process on 1301 Avenue of the Americas, a 100% leased Class A asset located in one of Midtown's best-performing core submarkets. Financing. Subsequent to quarter red, we closed a CMBS financing on 1325 Avenue of the Americas on a cash-neutral basis, extending the portfolio's current loan maturities while ensuring a well-laddered maturity profile. We also engaged on the refinancing of 31 West 52nd Street. Lastly, we are moving swiftly to execute on our growth-focused capital improvement strategy which includes the repositioning and amenitization of four key assets, two in New York and two in San Francisco, which we expect will drive significant rent growth and occupancy gains in 2026 and beyond. Turning to page 13, Ellicorp Properties leasing highlights. As Michael mentioned, in 2025, we leased more than 1.7 million square feet, our highest annual total on record. A significant percentage of our 2025 leasing velocity occurred in New York, where we are currently over 92% leased at share and the balance in San Francisco. In 2026, a significant percentage of our leasing activity year-to-date, including both leases signed and leases pending, is occurring in San Francisco, predominantly with leading technology and entertainment companies as well as leading law firms. At quarter end, our New York core portfolio's leased occupancy was 92.1% at share, up 470 basis points year over year. Initial rents in New York year-to-date on leases signed and leases pending is 12.2% higher compared to 2025, as leasing fundamentals continue to improve across the board in Midtown Manhattan. Our plan is to make significant improvements at both 1633 Broadway and 712 Fifth Avenue. 1633 Broadway is one of Manhattan's largest buildings. Our intention is to transform the lobby, infuse a second-floor amenity space with a signature bar and event venue, a 200-seat conferencing atrium on the 17th floor, and plaza and elevator upgrades. At 712 5th Avenue, we intend to create a hospitality-driven amenity offering, commensurate with the trophy quality of the building. More details to come. At quarter end, our San Francisco core portfolio's leased occupancy was 59.1% at share, driven largely by a couple of known move-outs at one market plaza and one front street within the past year. Year-to-date, we have approximately 280,000 square feet of leases executed or pending, which equates to approximately 70% of our San Francisco leasing velocity in 2025. The strengthening tailwinds in San Francisco, coupled with our growth-focused strategy, will drive continued leasing velocity and occupancy gains in our San Francisco core assets this year. Our plan is to make significant improvements at both one market plaza and one front street. At one market, we are redesigning the atrium and the entire ground floor experience, infusing a state-of-the-art conferencing center, fitness facility, atrium bar, seventh floor sky bar, executive lounge, and a rooftop deck. At one front street, we are totally reimagining the lobby with a cafe, a bar, a restaurant, a second floor amenity space with a gym, conferencing, a private lounge, and we will also be fully modernizing the elevator system in the building. We are moving quickly to execute on our key objectives and look forward to updating you on our progress.

Thanks Peter. By the way, a good sales pitch by Peter for if anybody's looking for space. We got a lot of really good stuff going on. I'll now talk about Genesis. You know, in my opening remarks, record quarter of billion six, what I would say is the business when you think about when you think about some of the noise coming out of the administration around build to rent and and there was an article I believe in the Wall Street Journal that I read this morning that discusses how some of the builders are actually pulling back and I think there's roughly 3.4 billion dollars of commitments that are on hold as a result of the some of the new proposed bills that are that are either being passed or have been passed as it relates to developers needing to not only build these units but then having to sell them in seven years as a result of that you are starting to see projects on hold you're seeing the SFR market at a standstill when you look at our business the Genesis business today is roughly 35 to 40 percent multifamily origination and I think what you're going to I know what you're going to see from us as we go forward a lot more production in the multifamily space we are going to grow that at some point we'd like to grow that around our asset management business so we look forward to that when you look at the business it's been it's been a great one for us we expect to do something between call it six and a half and seven billion of production this year the P&L on that when we when we bought the business in 22 was I think it was what roughly 45 to 50 50 million bucks or something like that this year we should do something between 150 and 175 of EBITDA so it's been a great business but like I said we won't sacrifice credit in lieu of in lure production when you know when you look as we go as we go here there will be some opportunities in our opinion in the so-called RTL space there'll be some opportunities in the housing market as we see some of the single-family rental operators get out we have a very small portfolio that we've been selling down to retail we got a couple thousand homes there but I do think there's going to be some dislocation there. You're seeing in some of the equity prices and some of the larger institutional holders in that business. With that, I'm going to turn over to Barron, who will talk about Nurez. We'll touch on the investment portfolio, and then we'll open it up for Q&A.

All right. Thank you, Michael. Good morning to everybody. Starting on slide 18, Nurez had another great quarter. First quarter pre-tax income, excluding mark-to-market, of approximately $274 million, which is up 10% quarter over quarter and delivering a 19% ROE for the quarter. The results were driven by our discipline origination strategy, higher servicing fees, and despite interest rate volatility, higher recapture and lower amortization. And this performance continues to show the power of our platform and our ability to drive consistent earnings. On slide 19, just a quick highlight, and just given the size and fragmented nature of the mortgage and homeownership market, we believe there is significant runway for scaled technology-first operators like Nuresh. Since the inception of our platform, we have grown our originations market share eight times and our servicing market share six times, positioning us, as Michael said, as a third largest servicer and the fifth largest originator. And as we continue to deliver on our strategy of making home happen, we continue to grow with our client place overall. On slide 20, we're highlighting our 2026 strategy with a focus on driving returns through revenue growth and a reduction in operating expenses. Our revenue growth is focused on maximizing overall customer lifetime value through the expansion of our partner base, continued product innovation, and homeowner retention. And that's shown in our consumer recapture rate and continued growth in our third-party servicing franchise. Our expense initiatives are laser-focused on harnessing technology to deliver operating Our cost per loan, which is already almost half of industry average, we project an additional 15% reduction from our current run rate. And executing on this growth up and spend down strategy is going to continue to deliver for our shareholders. Turning to slide 21 in our originations business, funded volume came in at $15.5 billion, which is up 31% year over year for lower than last quarter due to seasonal and interest rate factors. However, we continue to drive growth in our higher margin direct origination channels, consumer direct and wholesale, which comprise 37% in Q1 26, up 75% year-over-year. And while market competition continues to pressure gain on sale margins, we maintained pricing discipline, did not chase market share, and margins were contained within our historical four-quarter range. We also had a very busy quarter of new product launches, quick-close refinance application, our Wholesale Express, Home Equity Offer, Streamline Title, Crypto Mortgage, and Medical Laws, and most recently, our Freddie Mac Vantage Score pilot, demonstrating our shared commitment to responsibly expand access to home ownership and reduce costs to borrowers. On slide 22, we continue to build on our proprietary ResiAi functionality, which is an end-to-end intelligence system enabling our originations platform, allowing us to capitalize on our operational efficiencies. Our partnership with Home Vision is ahead of schedule with our first co-developed tools being implemented by the end of this quarter. All of these platform investments will continue to improve our operating leverage, driving further efficiencies in loans per FTE, capacity, and turn times. And finally, moving to slides 22 and 23 regarding our market-leading leading servicing platform, we continue to grow our capital-like fee-based third-party servicing business with five new clients and $22 billion in new loan boardings. Our owned MSR portfolio continues to perform well as delinquencies remain stable quarter over quarter and the FHA delinquencies flattened as we normalize the impact of the new FHA modification guidelines. Regarding Valen, we're on track for the transition to their operating system in early 27, and the magnitude of these benefits of moving to an AI native and modern servicing technology solution cannot be overstated. We expect to materially improve our processes and workflows, providing us a significant competitive advantage through our operating flexibility. And it will also be a significant benefit to any and all servicers who choose to move to Valen. Once we're fully operational, we're estimating total annual expense savings in excess of $65 million, or a direct cost for loan reduction of 15% to $93. So I continue to believe our business is in the best position as it ever has been, and I look forward to sharing the next chapter of the new ResGrow store. Michael, back to you.

Thanks, Barron. Just wrapping up here on the investment side, probably one of the more active quarters we've had in a while, quite frankly. As I pointed out earlier, we did four non-QM securitizations totaling $2 billion. The one thing I would say is this doesn't include some of the other things we're doing around certain funds that we've launched where we have flow products going in from some of our origination businesses, and we expect that to continue and to grow as we go forward here. During the quarter, $3 billion of investment, $1.4 billion in non-QM loans, $1.6 billion in RTLs. I pointed out earlier about the upgrade flow agreement, how we purchase more loans in the quarter. So overall, investment activities remain, what I would say, despite all the headline risk and the noise, robust. what you're going to see I you know from the firm as we go forward hopefully real growth in the ABF business under the you know the sculptor brands and and some of the other and and Crestline brands and again just staying quite frankly true to our coordinating and and where we can create an edge in the marketplace that's where you're going to see us grow but again as we as we as we look forward We're not going to sacrifice credit for AUM growth, and that's going to be our common theme. So with that, I'll turn it back to the operator, and then we can open up for some Q&A.

We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then 2. At this time, we will pause momentarily to assemble our roster. The first question today comes from Crispin Love with Piper Sandler. Please go ahead.

Thank you. Good morning, everyone. First, Michael, I appreciate your comments that you're not going to sacrifice credit for AUM growth, But can you discuss the fundraising momentum in the asset management business and the outlook there, Sculptor and Crestline, what you're seeing from institutions and then on the BDC private wealth side of those businesses, just given all the noise out there?

Sure. So what I would say on the, you know, I mentioned before, and this is a little bit of old news, the real estate group at Sculptor just raised $4.6 billion and probably one of the largest successful fundraisers, you know, in the real estate space, I would say, in a long time. When we look at the core competencies, and this is where I like to think that we have an edge, whether it be at, you know, Sculptor and you look at the overall track record at, you know, at what we've done at Rhythm and then at Crestline, we're going to leverage the core competencies of what we do. So, for example, when I look at the ABF space, we launched an evergreen fund in the third quarter with one of our wire house partners, which is performing extremely well. you know the the and that's backed by some of the production stuff that we create you know whether it be in Genesis or whether it whether it be in new res when you look at Sculptor's track record around the ABF it's quite frankly it's unparalleled we will be you know we'll be out with new funds there are here in the in the in the short run when you look at the credit performance overall as a firm and you know whether it be at Sculptor and or Crestline you know the The credit performance has been very, very good. We don't see any real deterioration in any of the names that we actually hold within any of the funds. And I do think it's important to note when you look at, you know, the so-called noise in the private credit markets, a lot of that has been driven by retail. So while everybody wants these evergreen funds where you theoretically have liquidity, we know when the world turns sideways or the markets get dislocated, there is no liquidity or very little liquidity and I think one of you know I cited this this morning in the documents it says you could have 5% redemption so when these markets these products are marketed and it depends on who the underlying fund manager is but when you look at the underlying markets and you have something that says in a document 5% redemption limits there's a reason that happens because if you think about it logically if Mr. and Mrs. Smith want to take out a dollar from their, whether it be their BDC or their credit fund, and Mr. and Mrs. Jones don't want to take out a dollar, why should Mr. and Mrs. Jones get penalized because someone else needs liquidity and you have to liquidate a good position? That's why I think in a lot of these documents you have these caps. Now, while saying that, I think it's an education process. There's been a lot of stuff that's been distributed retail. You know, the good news for us is we don't have a ton of stuff through retail the bad news or actually the good news for us is as we go forward I think the markets learning we don't think this as I pointed out in my opening comments this is not systemic risk and I think there's a huge opportunity for it the other thing I would say is that it is very very difficult to deploy the you know we're not going to be Blackstone or Apollo or you know one of the largest managers we're going to grow hopefully and we're going to grow through performance but when you look it's very very difficult to create alpha when you have to deploy the sheer amounts of capital that a lot of the large asset managers have kudos to them they built great businesses but it's very very difficult to deploy that kind of capital as it relates to the bdc's you know roughly i think the numbers are 20 of of the bdc's have software exposure um i pointed out in in in my earlier remarks um we haven't you know while the headline risk is dramatic and if you go back to 21 when interest rates were zero and you think about companies that were lent money at 20 times revenue not ebitda revenue and now you have ai kind of you know taking a center stage i think it's going to take time to play out we don't really know how that's going to play out you know as you think about the software industry i think software that's mission critical to businesses are going to be the winners. There's going to be a bunch of losers. Right now, when I look at our business, we feel really good. As we think of capital formation here at the firm, we're trying to simplify our business. Sculptor is going to be our asset management business. We have Crestline, which we closed, which is another division of asset management. They do different things. And now the teams are working together. And hopefully, we're going to raise a lot more capital. But again, that capital is going to be based on our ability to create alpha relative to the peer set that's out there in the marketplace, and that's what gets us excited. So I would say onward and upward, and the business feels really, really good to us. There is noise. That's going to create opportunity because when you think about the credit markets, and you have a five-year treasury, for example, at 4%, the high-yield index is 3.25, 350. Unlevered returns in that business are now 7.5%. Debt looks very, very attractive to us. And the last point I'll make and then turn it back to you is when you look, debt sits above equity. The S&P is at an all-time high. Something is not adding up here. So we'll see how it all plays out. But we feel really, really good where we are from an asset management standpoint, where we're going with that division, and how we're going to create more FRE and hopefully turn the tides on the overall valuation of our public equity.

Great. Appreciate all the color there. That's a good segue into my next question because just one pushback that I get from investors is that that rhythm has become more complicated. You're definitely diversified, but in a lot of areas, the results have been strong, but some investors may just move on to a simpler story. So first, what's the response to that? And then just second, what are the key ways that you're looking to simplify the business and the story overall to trade closer to that sum of the parts level?

One is we need to grow our FRE and our asset management business, and that is a big focus, right? So, you know, obviously part of that will come with AUM growth. Part of that will come with synergies, and that really is going to be a driver. So as we create more FRE, the asset management business can then get separated from the broader REIT. So when you think about it, we have really two main divisions in our operating business. One is the mortgage company, which we, again, another simplistic thing. Everybody wants you to take it public. I'm not sure that it's the best time to do that. Obviously, you looked at one of our peer, you know, one of the peer mortgage companies, their stock, you know, when you miss earnings and the stock goes down by 35% in a day, it's, you know, no investor wants to be in that position. So you can simplify by taking the mortgage company public, breaking out the asset management business. You have Genesis, which, you know, is going to continue to grow. But what you're going to see in some of these businesses is more third-party relationships. Because the one thing that's different today than where we were a couple years back is that the adoption of ABF as an asset class for third-party LPs has never been greater. And there's a reason for that, right? So you've seen a little bit of rotation out of private credit into what we'll call real assets. In the ABF space, you have assets that are, you know, kind of think about almost like hard assets where the cash flow is backed by these hard assets. So you're going to see more and more capital deployed there. But overall, like the REIT is still the REIT. You know, if I had my druthers or we had our druthers, you know, we paid out $6.6 billion of dividends over since we started the company in 2013. 550 million shares, that's about $13 a share. You didn't pay out, I think. I don't have my calculator in my head, but I'll try. Anyway, if you think about that, $13 plus $10, it gets you to a mid-20s stock price. So I think part of the challenge is as we continue to maintain REIT status and pay this dividend, which we have no intention of changing right now, growing the asset management business has to be job one. Thinking about simplifying the mortgage company story, and Barron and the team have done a great job there, But I think AI and I think Barron's a little bit, you know, and Barron's a little bit shy about the amount of money that we're going to save there. But I do think the mortgage industry is going to change dramatically. So I think telling the story around the mortgage company, telling the story around the asset management division, the REIT's not going anywhere. As you know, we just did the Paramount deal. We're going to bring in third-party relationships there. And it's really, you know, one of the things we're very focused on, how do we grow earnings, right? If we could grow earnings and create more growth businesses, that will help us. Because we have all the pieces we need at this point. But, again, and I hear you, Crispin, part of the challenge is how do we simplify the story. But I think the bigger asset managers, I would argue, are not any more simple than we are. I'd argue they're more complicated. So I think as we continue to get lumped into the REIT space, people will think we're complicated. If we go into the asset management space, I think we'll be less complicated.

All right. i appreciate all that that michael um that's it for me thanks kristen the next question comes from bose george with kbw please go ahead hey everyone good morning um if she on the switching to the mortgage side um your gain on sale margin on the wholesale and correspondent was down a little bit um retail was up was it was it mixed doing some of that stuff or were there trends in the quarter that are worth calling out?

I do think it is a little bit of a mix. I also think, you know, there's some competitive pressures overall, you know, with respect to, you know, non-QM. You know, I also think when you look at our performance in Q4, especially on the wholesale side, we definitely had a good quarter going into Q4, and I think we just basically normalized back to margins, you know, as to where we landed, you know, in Q1. But, you know, in a lighter origination volume, you know, you would expect that, you know, things would normalize.

Okay, great. That makes sense. And then just quarter to date, any changes in book value to call out?

No, Bose. We're essentially flat quarter to date.

Great.

The next question comes from Doug Harder with BTIG. Please go ahead.

Thanks. I'm hoping you could talk a little bit more about Elicor and, you know, bringing in third-party capital, you know, just in kind of reducing the capital commitment down to kind of what you talked about at the time of the deal announcement.

So, we closed the deal on, I think, December 20th or December 19th. So, we're one quarter in. Peter alluded to it. We've created, I think, $40 million of savings in three months, so we're very proud of that, and the conversations we've probably had, whether I tell you it's 100 or more LP discussions since we've acquired the portfolio. What I would say, we're out, and Peter mentioned, we're out with a potential JV partnership on 1301. We have a JV relationship with Blackstone on one market in San Francisco. We have a JV relationship with another party, Beacon, on one of the other assets in San Francisco. We'll continue to either do JV relationships, which you'll see us, you know, quite frankly, create gains. But I think for now, it's really how do we operate the company. I wouldn't be shocked if at some point we bring it back out in the public market. So I think it's a little bit too soon to do that. That could be a real capital raise as we think about creating external management fees around certain things. So I think it's all TBD. But over the course of the next kind of nine months or eight months through the year, it's likely we'll do some JV relationships slash third-party LP relationships, you know, on the assets.

Got it. And, you know, kind of given your view on commercial real estate, are you considering kind of deploying additional capital into your two target markets, or is that mostly going to be through kind of the property enhancements you talked about?

I think it's both. You know, in the business, and, you know, we've gotten asked this question in the past, why do we do this deal? So when you have the ability to acquire what we think are great assets at cheap prices, you do it. And I think it's that simple on this portfolio. You're on Fifth Avenue and Sixth Avenue, great operating team who we've unleashed, quite frankly, today relative to where the company was positioned before we acquired the company. Peter and his team have done a great job. That's how you make the money. You know, buy cheap assets at a very attractive value, and these are quality assets. They're not mid-block. You know, they're on the big avenue. So we're super pumped about this one.

Great. Appreciate it, Michael.

Thanks, Doug.

The next question comes from Marissa Lobo with UBS. Please go ahead.

Good morning. Thanks for taking my questions. Just moving to genesis, looking at construction loans are about 52% of that book. As tariffs are pushing up labor and material costs, are you seeing any stress on individual projects, or how has underwriting changed there?

You know, our underwriting box is always pretty tight. I don't think that's any different than where we've been overall, you know, since we've acquired the company. I will tell you, you know, listen, I'm like everybody else. You look at consumer sentiment, I'm a little bit nervous. I mean, you go out and you buy a sandwich, it's $15. bucks. So you have to watch out for, I think, overall, the state of the consumer. Some of the noise out of D.C. gets you a little bit concerned as you think about the so-called build-to-rent space. I think seeing the article in the journal this morning, I think it's a positive as the administration will hopefully peel back some of the thoughts that you have there. But overall credit, you know, we're extremely diligent. The gentleman that runs that business for us, Clint Aerosmith, does a great job. He, you know, by background, he's a bank credit officer. So it's not just to grow volume, it's to grow volume in a meaningful way with a tight credit box. We do a lot of different things than I think a lot of the other folks in that space and will maintain discipline around credit. You know, the portfolio I think is 3% is the delinquency numbers. And when you think about the average advance rate, they're typically well below the industry. So we feel really good about where we sit there right now. But there's been no real change. But from a risk standpoint and a discipline standpoint, there's been no deviation to grow origination in lieu of credit.

Thanks for that. And looking at the new origination yields of 9.5 down from 10.1 in Q4, Or is this a function of a mixed shift or tighter spreads in the market?

It's a little bit, you know, everything's a little bit more competitive. As I pointed out earlier, there's huge demand for ABF products. This is one of the things that falls within that bucket. While saying that, you know, you have points in and points out, and you've got different types of fees. So, overall, the unlevered yields are still give or take about 10%. And when you look in the securitization markets or we put them into funds in securitization, you're looking at well into the double digits on a net net basis. So we feel, you know, we love that business right now.

Thank you.

Thank you.

The next question comes from Trevor Cranston with Citizens. Please go ahead.

You know, when you guys look at the proposed capital rule changes for banks, do you think that has any impact on, you know, their participation in the mortgage market or the servicing market. I guess I was particularly curious about how you think that impacts the correspondent channel at New Res.

It should help the MBS market, quite frankly. You know, you got the basis in and around 105 basis points. I think the tights we saw pre the, you know, the conflict in the Middle East was about 90. That was the tights. we got out to $125,000, $130,000. Historically, being a mortgage bond trader myself, I think stuff seems fair to cheap here. So I wouldn't be surprised if the banks come in. I think some of this depends on the new Treasury Secretary, not Treasury Secretary, the new Fed Chair, that's going to come in and wash when he gets elected. He's a little bit more of an inflation hawk. And we were talking last night about you have a massive deficit in the U.S. It's roughly $40 trillion. So they're going to have to continue issuing a lot of securities to fund that deficit. The question is, is that more in the front end than the back end? I think the other thing that probably some of the bank CIOs are thinking about is inflation. You saw this morning in the UK, I'm looking at bond yields of north of 5%. You look today, the front end of the treasury markets in the 380s. 10-year treasuries are now 435. So I think some of that will play into what the banks do. But overall, I would think with easier bank rules and the banks having a ton of cash from their deposits, you're going to see them come back into, or they're in the mortgage market, but I think you'll see them acquiring more. On the servicing side, don't know. I mean, honestly, I think it's, you know, they're one of the, a couple of the money center banks already have been involved in that space for a while. I think that could continue. We just have to be disciplined about how we originate loans and make sure we're not doing something for market share versus actually making the money, which was Barron's earlier That makes sense.

And then, you know, you mentioned briefly the kind of decline in valuations in some of the public mortgage companies that are out there over the course of this year so far. Are you guys seeing any sort of M&A opportunities associated with that, or are there any platforms, you know, you think that have maybe gotten cheaper that might make sense as a sort of add-on to the existing platform?

You know, historically, our M&A around the mortgage company space has been where we think we could acquire cheap assets as part of the overall acquisition. When you look at the company today, we don't need anything new. So, you know, when you look, I think there's give or take 10,000 people, including contractors at the mortgage company. You know, Barron and the team are focused on getting really efficient. When you look at, you know, the adoption of AI and, you know, some of the partnerships that we've set up as a company, I don't, you know, we don't have a need to buy another mortgage company. If there is a mortgage company that's out there that's cheap, there's not that many left, quite frankly. When you look, Rockets acquired Mr. Cooper, which we built at Fortress. We built Nurez. You know, there's just not that many out there that are independent now. You have United Wholesale, but overall, I think we don't need anything more.

Appreciate the comments.

Thank you.

The next question comes from Kenneth Lee with RBC Capital Markets. Please go ahead.

Hey, good morning, and thanks for taking my question. Just one on the new res side of the business and the potential benefits from AI and efficiency moves there. It looks as if in 2026, you could potentially expect some increased productivity around loan processing. Do you expect to see some of these benefits materialize over the next quarter or two, or is it mainly weighted towards the latter part of 2026? I just want to get a little bit more color around the benefits there. Thanks.

Yeah. On the origination side, right, we talked – I talked a little bit about Home Vision and our partnership there. So that is going to be – you're going to see those benefits materialize coming into the second half of the year. All right. Our initial product launch is ahead of schedule, and we hope to have those tools in place really going into the third quarter.

Gotcha. Very helpful there. And just one follow-up, if I may, just around the Crestline business and realizing that most of the clients that you're serving are from the institutional side. I wonder if you'd just talk a little bit more about color you're seeing around institutional investor demand for direct lending. What are you hearing from clients more recently?

You know, it's interesting. When I was in Asia with Keith Williams, who runs Crestline, there's still a lot of demand, what I would say, for direct lending. While saying that, I think that's more institutional-based. You're seeing a little bit of rotation, obviously, with headline risk. If you're a retail investor and you're not in the markets every day, I think if you could rotate out, that's probably some of the stuff that you'll see go on over the next quarter or so. But in general, you know, we have all kinds of different funds in the market and capital formation continues. You know, we have to lead with performance. You know, if we're that heavily weighted to software and you sat down with an LP and you said, well, our software exposure is 20%, they may say, like, I don't really want to do this. I would say that the background of Keith and the team at Crestline, and they go back to, you know, 25 years of, and a lot of the folks in that very direct, same direct lending space, whether it be the, you know, the folks at Sixth Street or there or at Crestline come out of the old Goldman model. So we feel really good about it, and I think you're going to see more capital being raised around direct lending, and they'll continue to do that.

Very helpful there. Thanks again. Thank you.

The next question comes from Henry Coffey with Wedbush. Please go ahead.

Yeah, good morning, everyone, and thank you for taking my question. The flip side to the complexity issue, and we've all talked about that a lot, is that there's always one business that does well and another that maybe doesn't do so well. But combined, you always end up at a nice spot. If you look at your different businesses, Michael, can you tell us, you know, not to pick on anybody, but, you know, how do you rank in terms of who's really knocking it out of the park right now and which businesses are facing, you know, legitimate headwinds?

You know, I would say, and I don't want to sound like we're the, you know, I don't want to tell everybody we're always the best in everything, but overall I think, you know, everything's performing extremely well. You know, the real estate business, the Paramount, or now known as Helicor portfolio, is great. The team there, we're so excited to be working together with that team. You know, Barron, there's nobody in our organization that works harder than Barron, other than me. Now, Barron works his tail off, and Barron and his leadership team do a great job around the mortgage company. Clint and, you know, and the Genesis team continue to put up great results. And the asset management business, I think, is just getting started. You know, we're at $60 billion now. And, again, it's not an AUM race. We have to perform. So when everybody asks us, what else do we need or what's next, there's really nothing that's next unless we think we're going to create an edge for our LP base. And so I think, you know, and then the investment portfolio at Rhythm. Charles Sorrentino and the team do a great, great job. And we're all working together a long period of time. We love where we sit in the ecosystem. If there's anything that kind of bothers us, it's the overall valuation of the so-called sum of the parts. But in general, I think all the businesses continue to perform really well.

More pedantic. When you look at the P&L and the EAD calculation, is this pretty much the way the business is going to look with some improvements in efficiency? It's just sort of the new overhead level.

No, I think we're always looking at overhead. We're always looking at ways to become more efficient. EAD needs to grow, and that will hopefully grow as the asset management business grows and we get more efficient. But we're always looking at headcount. We're always looking at ways to become more efficient. You know, the mortgage company, I think, you know, the mortgage company does, what, $4.5 billion of revenue, something in that range. when you think about it if we net give or take about a billion dollars ish there's a lot of room to actually get more efficient there and I think it's not just people wise quite frankly it's processes wise it's processes and I think you're going to see that with AI changing the mortgage industry so we're excited about that but in general we look at everything asset management fees should grow over time as we as we continue to perform for our clients 87 $67 million in depreciation, is that the new run rate, or is there some new extra items in there?

Henry, that's a little bit higher than the run rate. That includes both the Adore portfolio as well as Ellicor. So as we sell down the Adore portfolio, you can expect that number to come to around $60 million, $65 million a quarter.

And the Adore portfolio, just for everybody's edification, that's our single-family rental business. You know, as I pointed out, we have a few thousand units or a couple thousand units, and that continues to get sold down retail.

Thank you very much.

Thanks, Henry.

This concludes our question and answer session. I would like to turn the conference back over for any closing remarks.

Thanks for everybody dialing in. Thanks for your questions. Thanks for your support. Look forward to updating you on another quarter here in the near future. Have a great day.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.