Thank you for standing by. At this time, I would like to welcome everyone to the Rhythm Property Trust First Quarter 2026 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, press star 1 again. Thank you. I would now like to turn the call over to Emma Holke, Associate Counsel. You may begin.

Thank you and good morning, everyone. I would like to thank you for joining us today for Rhythm Property Trust's first quarter 2026 earnings call. Joining me today are Michael Nirenberg, Chief Executive Officer of Rhythm Capital and Rhythm Property Trust, and Nick Santoro, Chief Financial Officer of Rhythm Capital and Rhythm Property Trust. Throughout the call, we are going to reference the earnings supplement that was posted this morning to the Rhythm Property Trust website, www.rhythmpropertytrust.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. And with that, I will turn the call over to Michael.

Thanks, Emma. Good morning, everyone, and thanks for joining us. For the quarter, the company had a pretty uneventful quarter as we continue to look for opportunities that could be a game changer for this capital vehicle. With asset manager valuations under pressure, downward pressure on equity valuations in the public markets, we're going to continue to remain patient and work towards creating value for shareholders. While the geopolitical events affecting the world, credit spreads have remained actually in a relatively tight range, and markets in general are performing well away from the headline risk we've seen in some of the retail private credit. Even there, if you take out the retail component, private credit is still performing well. The software headlines you've been reading about will take a while to play out, and the earlier vintages in the private credit world where companies borrowed money at large multiples of revenue will likely be the ones affected negatively in the future. And a lot of those deals were originated back in the 2021-ish kind of vintage. For RPT, we positioned the company for success by doing the following. When we took over this vehicle in 24, we made a decision to clean up the balance sheet, liquidate a lot of the residential stuff, and reposition the company in the commercial space, using this as an opportunistic vehicle to deploy capital in the commercial world. Today, the company has just a little under $100 million of cash and liquidity. The balance sheet is extremely clean. There's no problem loans and, again, is in great shape. While we continue to wait for the opportunity to transform the company, we'll continue to pay the dividend. From an optionality standpoint, at some point, it's likely if we can, we need to grow the vehicle, quite frankly, from an overall capital standpoint. If we can, we'll be looking at different opportunities in the M&A world, and at some point, we may consider even buying back a little bit of stock here. With that, I'll refer to the supplement that we posted online. I'm going to start on page three, and again, this is just really the summary of what Rhythm is, Rhythm Property Trust. Today, the pipeline is give or take about $2 billion. It's always fairly robust. We're looking at large opportunities in the multifamily space. We also evaluate things that we could potentially do around our Genesis business, where we continue to grow our multifamily lending there. The equity is a little bit under $300 million. It's about $287 million. The commercial real estate portfolio, this is all post-24 vintage things that we've done. It's $236 million, and we have give or take a little bit under $100 million of cash and liquidity. When you look at the financial highlights for the quarter, quite frankly, not a lot of activity. We sold down a little bit of – we sold a few CRE floaters in the quarter to create a little liquidity, looking for better opportunities, quite frankly, to increase earnings. You know, as I pointed out in my opening remarks, the credit markets have continued to perform well. The CMBS markets perform well. But while saying that, we'll continue to monitor opportunities to turn over the portfolio on deployed capital and higher-yielding assets. Gap income, negative $3.2 million or $0.42 per diluted share. Keep in mind, we did a reverse split. I think it was in Q4. Earnings available for distribution, negative $300,000 or $0.04 per diluted share. Again, not a lot of activity. A lot of this relates to either the G&A or the dividend paid. Dividend paid in the quarter, $0.36 per diluted share, which correlates to about a 10.8% dividend yield based on where the equity is trading today. Book value, $236.2 million, or $30.83. And then, as I pointed out, cash and liquidity, a little under $100 million. When you look at RPT, you know, I mentioned again earlier the strategic transformation. You know, again, going back to when we took over this vehicle, we cut G&A dramatically, we cleaned up the balance sheet, we sold down a lot of the residential portfolio where we could, and I'll talk a little bit about the equity that's remaining in the book. We've made some new CRE investments, and that was mostly done in floating rate, AAA, CMBS. We made a few loans on the debt side. We deployed $50 million in equity alongside Rhythm and the Paramount transaction, which we closed in December of 2025. We continue to renegotiate our repo agreements, and we continue to improve liquidity. So overall, the company's in, what I would say, as much as there's very little activity, in great shape, and we look for an opportunity to deploy capital or create more capital, quite frankly, on something that's going to be a game changer. You know, I'd like to go back and refer to what Blackstone did with BXMT many years ago or what we did with Rhythm, which was going back to 2013, where we started that with a billion dollars of capital, and today, you know, the company has about $8 billion of capital. So we need to be patient here. As I pointed out, we'll continue to pay the dividend. At some point, we need to make a move to either clean up the vehicle or figure out a way to grow it. And obviously, we're actively trying to grow the vehicle. When you look at page six, the repositioning of the portfolio, you know, where we can go here. I pointed out on the Genesis side, we're doing more lending in the multifamily space. There could be some opportunities to work together with that company. We continue to look for opportunities to put out capital in the debt markets on the CRE side, and then we'll continue to evaluate opportunistic investments and figure out different ways that we can increase shareholder value. And then on page seven, it really just talks about how Rhythm Property Trust benefits from the overall Rhythm ecosystem, and that includes, you know, the Paramount transaction that we closed in December, and then our asset management business is Sculptor and Crestline. So with that, I'll turn it back to the operator. We could open up for Q&A and then get on with our beautiful Friday.

This time, I would like to tell everyone, in order to ask a question, press star, then the number one on your telephone keypad. If you would like to withdraw your question, please press star one again. Thank you. We'll pause for a moment to compile a Q&A roster. And your first question comes from the line of Craig Cousera with Lucid Capital Markets. Please go ahead.

Yeah, hey, good morning, guys. You know, optically, it looks like the strategy this quarter was to reduce your CNBS holdings and be leveraged. Are you expecting to lever back up in the near term by investing in other asset classes, such as loans from Genesis, or should we expect leverage to be a little bit diminished for the near term?

Yeah, you know, we looked during the quarter, you know, the markets felt, despite performing well, the markets felt, or the world feels horrible. So when you think about that and credit spreads, and we saw a high yield gap a little bit wider, but then it came at about 50 basis points to where it is today. So we use that as an opportunity to say, if the world doesn't feel as good, let's spell down some of our, what I would call, levered AAA CMBS. which is yielding, give or take, about 10%, with the thought is we might be able to deploy more capital in higher-yielding assets. Quite frankly, we, you know, at this point, will continue to sit on the cash and look for those opportunities. I mentioned in my opening remarks we're looking at a large portfolio now of multifamily assets that will be coming at some point in May. and, you know, we're seeing some opportunities on the debt side, quite frankly, that I think we'll be able to deploy capital at higher yields than where we are on some of the AAAC MBS. But, you know, for now, it wasn't really just to reduce leverage. It was to create more capital for what I would call opportunistic investing. But at some point, that capital will get redeployed, where that goes back into a debt, you know, some kind of lending, multifamily, or even buying back some equity here.

Yeah, and I guess if the market, or at least how you feel about the world, continues to be sort of miserable, do you think you'll continue to harvest proceeds from CMBS, or do you think you kind of work through what you want?

We're in a really interesting period of time, right, because when you read the headlines or you think about the headlines, there's been a lot of negativity around private credit, yet you look at a lot of firms that are in the PE business, and they're still sitting on a lot of these portfolios that go back many, many years. You look at the equity markets, we're at all-time highs. So if you think about private credit, private credit sits on top of equity. So what's going to go first? The equity. So when you look at the public markets in general, you know, the markets feel, as much as the world feels terrible, the markets are performing extremely well. We look across RMBS, you look across CMBS, you look at the liquidity that we're seeing in all these different lending markets. Things are actually okay. The geopolitical side just feels horrible, though. You know, obviously, there's a lot of headline risk coming out of the administration and other places. But so I think we're just looking for better opportunities to actually create more earnings.

Got it. Changing gears, there was a pretty decent pickup in professional fees this quarter. Was that more just a one-time event, or should we expect to see something similar going forward?

That was a one-time event in the quarter. It had to do with us looking at various capital auctions.

Okay, fair enough. And this quarter, you closed on the Paramount transaction in the fourth quarter at the Rhythm Parent and, of course, Rhythm Property put in $50 million. Was there any impact in the income statement this quarter from Paramount?

Paramount for the quarter was essentially flat.

Okay, that's helpful. Will that ramp up at any point, or should we expect that to be really more of a backloaded type of investment?

No, it will ramp up as the investment continues to increase and as we make progress on Paramount.

Just a little color on that. When we closed the company, I believe we closed the transaction on December 20th. So we've had really just a quarter of working on that. We've taken G&A from $65 million down to about $30 million. The performance, you know, the lease-up activities is at the highest levels we've seen in 20-plus years. You know, when you look at the properties, you have New York and San Francisco. We're in the middle of doing a few refinancings. We have some potential, you know, JV equity investments. So, you know, we're excited about that. We've had a ton of conversations with different LPs. You know, the initial thought there was it's an opportunistic situation, but around that we're going to raise capital either from third parties or just bring in JV partners with the intent of trying to make 2x and 20-plus percent on our money. So some of it will be back-ended. Some of it will be, as to Nick's point, as we agreed up over time, but that hopefully should be a good one. You look at our New York portfolio, for the most part, it's essentially leased up. So things are good on that one.

That's it for me.

Thank you.

Your next question comes from the line of Jason Stewart with Compass Point. Please go ahead.

Thanks, Michael. On the Genesis loans, are those likely to be more portfolio-based and chunky, or is there an opportunity for flow? And then a follow-up on Craig's liquidity questions. Is there an opportunity to do anything with the unsecured debt, just given how much liquidity is on the balance sheet?

So the unsecured debt, I believe, is like a 9 and 7, 8 kind of coupon. If we can get the company rated a little better, that drops to 8 and 7, 8. When you think about that in the debt markets for this type of company, it's not a horrible cost of capital. So, obviously, we want to make it more accretive and make sure the investments are more accretive, thus selling down some of the CMBS and looking for an opportunity to deploy in higher-yielding assets. When we think about Genesis, on the Genesis side, you know, we bought this company, I think, in late 21-22. At that time, they were doing $1.7 billion in production. The company was making $40-odd million of EBITDA. We've taken that where this year I think we're going to do something between $6 and $7 billion of production, and the company should make between $150 and $200 of EBITDA. So it's been a, you know, knock what, it's been a very good, successful acquisition, and it's been a great feeder for our business. You know, from Genesis, we've established a couple things. One is we have a non-traded REIT. We launched with one of the large money center banks where we're actually raising capital alongside some of the production that comes out of Genesis. That's gone extremely well. We've also done a large SMA around some of the Genesis flow with one of the sovereigns, you know, overseas. So when we look at what we've done there, that's been a great one. Now we're actually looking at is there a way to take, you know, these assets in the securitization market, quite frankly, that could be north of 20% or 15% to 20%. Can we actually use this vehicle to either around multifamily or some of the other stuff that's not going into these flow programs to actually grow earnings at RPT? So that's something that we're extremely focused on. Hopefully we get there and, you know, and that business continues to grow. So that's really the thought around the Genesis side.

Got it. Thank you.

Your next question comes from the line of Henry Coffey with Wedbush Securities. Please go ahead.

Good morning. Obviously, actually a lot of progress in here, and you can cut your losses. And if we go with Nick's comments, we're almost at the point of break even on an EAD basis. If you – things – the environment or the political environment is bad, but it's probably not going to get worse. And so it's fair to say that the debt and credit markets, whatever they are, aren't going to get worse. And what's the holdup in terms of deploying assets? Are there like opportunities, like you said, that don't show up until May? Are there enough opportunities out there where you could, if you wanted to push hard, leverage this thing up now? What is sort of the overall temper of the market right now in terms of opportunities?

This vehicle on a relative basis, Henry, is extremely small. You know, we need to create a large pool of capital to make a difference in the earnings and profile of the company as we go forward. You know, and I think to your point on the equity or the debt and credit markets, there's a ton of capital still out there in the markets being deployed. You know, when you look at, you know, all the headline risk, and you've heard some of the other folks that run, you know, some of the larger asset managers, you know, on their – the real headlines around the private credit stuff were really the redemptions that came about from retail. Anybody that has institutional money, those are typically going to be in longer-dated locked-up funds. So that's not really the problem in what I would say the credit markets. So if somebody comes out, and I use this example, I was in Asia last week speaking. If you look, most of these documents have, you know, I'll call it redemption limits for a specific reason. And to the extent that retail comes in and they want, you know, and you've seen folks want 10 or 15 percent out of some of their, out of some of these funds, a lot of the funds have 5 percent limits. And they have 5 percent limits for a reason because you don't want to just liquidate good assets for the sake of liquidating because retail needs the money back. So I think my whole view on this is that on the private credit markets, it's really an education process. How do people, you know, how does a private wealth client buy into a private debt fund or private credit fund, making sure they understand really what the liquidity functions are? Because what you're seeing in the markets these days, there's been a lot of demand for evergreen-type funds. We have an evergreen-type fund out there. I mentioned on the Genesis stuff. And you just have to make sure there's an ample amount of liquidity. Now, it's a very different thing, I think, when you have assets that are secured or cash flow that's secured by assets as what we do in Genesis and really in the so-called ABF space. But the gist of it is around the private credit markets is that you're not seeing a lot of selling. You're seeing more capital that continues to get deployed, and you haven't seen this huge gap in spread. So, overall, when you think about where we are, there are going to be opportunities, but we haven't, you know, we wanted to create a little liquidity during the quarter in the event that we could deploy at a much higher level. And, quite frankly, we just haven't seen it come to fruition. I pointed out on the multifamily stuff, you know, that is a reasonable-sized deal that we're actually looking at. Rhythm Property Trust cannot do the entire thing, just to be clear. So it could be a combination of third-party capital, rhythm property, trust, and rhythm. And, again, that's similar to the way a lot of these other larger asset managers have grown their business, where they're using different capital vehicles and funds to share in the, I'll call it in the wealth of a great investment.

On the capital side, there's a funny Cajun joke that I'll share with Ken later on. But, you know, this is kind of a chicken or an egg thing. And it seems, you know, we have a lot of confidence in you as investors. And there seems to be a point where you just have to kind of do it, accept maybe some near-term dilution, and then, you know, get on with the business of growing RPT into a bigger business. What does that pain threshold look like for you?

I think as long as we think that we could do something that's a creative longer term for shareholders, we'll do it. I mean, I think the whole notion of the REIT business, when you think about it logically, we're a REIT trade relative to asset management companies, and it's effectively the same thing. The only difference is, you know, I look at Rhythm, you know, our bigger company, obviously. You know, we're trading give or take five times, EBITDA. You look at some of the larger asset managers, they could trade anywhere from 10 to 30 times. So the whole arbitrage, if there is an arbitrage, is to continue to create asset management vehicles where you can turn them from five times to ten times. You know, in the case of Rhythm, if we did something like that, the stock's a $20 to $30 stock, you know, and it trades a give or take $10. You look at Rhythm Property Trust, we need to raise pulls of capital. We've been very good in discipline around maintaining book value in all of our REIT vehicles because I think we're, you know, we have a lot of expertise around the house. We've been doing this for 30-plus years or whatever it is. And from a market's perspective, we're typically, you know, we have a reasonable view from a macro level. As it relates to this vehicle, to the extent that we can raise a large pool of capital and it gets deployed accretively and all of a sudden earnings start moving, we'll do it in a heartbeat.

I mean, the stocks at half a book value, issuing stock here would be painful, but maybe also the recognition that, you know, the market's not really getting it. And maybe the pain from issuing stock at this level would only be temporary.

And I'm just kind of fishing for it. But you need to do it around an accretive transaction. It's not just to raise capital, is what I would say. So if there's something that's hugely accretive, then we'll come back into the market and we'll work with our, you know, we'll work with our investor base and we'll work with our capital formation groups and our banks and we'll try to get something done. Somebody, I think it was either Craig or Jason asked about the one-time charge. That was part of what we were working on in the quarter is to figure out how to raise a pool of capital.

All right. Thank you. Lots of progress here.

Your next question comes from the line of Jade Romani with KBW. Please go ahead.

Thank you very much. The commercial mortgage REIT sector has been under pressure for several years, and there only seem to be a few companies successfully emerging from this eerie downturn in values and credit, with scale being a big differentiator. There's been one interesting deal in the space, which is the ARI sale to Athene of its entire loan portfolio. And at the same time, we're seeing real estate transition activity pick up and LP investors start to increase their real estate allocations. So I wanted to ask if you're seeing any change in engagement from perhaps public commercial mortgage REITs, the smaller ones, or otherwise private vehicles about potential combination scenarios.

Yeah, I mean, I think one of the things that we've been very good at over the years is to try to differentiate ourselves from others. You know, look at what we've done in the mortgage spaces. You know, we built, you know, it goes back to the Fortress days. We built Mr. Cooper, which is now owned by Rocket. We built One Main, which is now, you know, public market. We sold down the equity to Apollo when I was at Fortress. We built NuRes from nothing, and that company is great. You know, we built Genesis Capital or helped grow Genesis Capital. So we've been very, you know, what I would say is we've been pretty acquisitive, which has enabled us to grow our business. We'll continue to look at M&A, particularly in the world that you point out. It's not easy getting folks, you know, the combination side when you talk about, you know, what I would call a lot of broken REITs. This REIT is not broken. This balance sheet is crystal clean. You know, there's, you know, when I look at the equity, just to give you a sense, there is, give or take, about, you know, a hundred-ish million of equity that's tied up in residential deals that are marked extremely well, that are, you know, they're re-performing loan deals that were created by the prior management team at what was known then as Great Ajax. So when I look at where we want to go with this and I think about, you know, the overall reach space, we'd love to do combinations with folks. We want to grow it. I will tell you the Paramount transaction has opened up the door as a firm for us. We've probably had, you know, hundreds of conversations with LPs and different folks about, and that's on the private side, obviously, in different real estate activities or real estate transactions. And that will continue. So I think that's been a really good one. You know, our asset management business at Sculptor, they raised, you know, $4.6 billion on their last fund, and they're extremely active in the real estate space. So, you know, getting these smaller deals, everybody wants to do a deal, or we want to do deals. Not everybody wants to give up their business, quite frankly, on something that's underperforming. I mean, it's just that simple. These smaller businesses are very, very difficult to have them exist and to try to grow because you need the capital to grow it. So my long-winded answer is we're always actively looking to do M&A around this, and I think you're going to see more M&A in this. But our balance sheet is crystal clear, right? Crystal clean. We're very, very different than I think some of the other legacy REITs that have, quite frankly, suffered a little bit here based on some of the earlier vintage lending that's occurred.

Thanks very much.

There are no further questions at this time. I will now turn the call back over to Michael Nirenberg for closing remarks.

Thanks so much for your questions. Have a great weekend. Look forward to updating you throughout the quarter.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.